SEBI Introduces Credit Risk Based Investment Limit For Actively Managed Mfs In Debt Instrument

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New Delhi: Capital markets regulator Sebi on Tuesday came out with a new framework which will put a cap on investment made by actively managed mutual fund schemes in a single company’s debt instrument.

At present, such caps are already in place for passive funds such as Exchange Traded Funds (ETFs) and index funds in a bid to effectively manage the risk associated with such investments.

“In order to avoid inconsistency in investment by mutual funds in debt instruments of an issuer, irrespective of the scheme being actively or passively managed, it has been decided to introduce a similar credit rating based single issuer limit for actively managed mutual fund schemes,” the Securities and Exchange Board of India (Sebi) said in a circular.

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