NEW DELHI: In order to have more skin-in-the-game, asset management companies (AMCs) will now have to invest a minimum amount as a percentage of the asset under management (AUM) of a mutual fund scheme depending on the risk profile of the scheme.
The higher the risk, the higher the minimum investment the fund house would have to make.
As per a recent Securities and Exchange Board of India (SEBI) circular, an AMC will have to invest -- either from its net worth or from funds garnered from their sponsors – at least 0.13% of the asset under management (AUM) in a scheme with very high risk.
The investment has to be a minimum of 0.03% of the AUM if the scheme falls in the lowest risk category.
The risk value of the scheme would be based on the risk-o-meter of the immediate preceding month. The investment will be maintained at all points of time.
“AMCs will, except in case of close ended scheme(s), conduct a quarterly review to ensure compliance with the requirement of investment of minimum amount in the scheme(s) which may change either due to change in value of the AUM or in the risk value assigned to the scheme,” says the Sebi circular.
However, AMCs would be not be required to invest in ETFs, Index Funds, Overnight Funds, Funds of Funds scheme(s) and in case of close ended funds wherein the subscription period has closed as on date of coming into force of this rule.