SEBI Alignment of interest of Asset Management Companies (‘AMCs’) with the Unitholders of the Mutual Fund Schemes

Last updated: 04 September 2021

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The Securities and Exchange Board of India (SEBI) has introduced new regulations requiring Asset Management Companies (AMCs) to invest a minimum amount in their own mutual fund schemes. This move aims to align the interests of AMCs with those of the unitholders. The required investment is a percentage of the Assets Under Management (AUM) and varies based on the scheme's risk level, as indicated by its risk-o-meter.

Securities and Exchange Board of India Circular SEBI/HO/IMD/IMD-IDOF5/P/CIR/2021/624 September 2, 2021 All Mutual Funds Asset Management Companies Trustee Companies/ Board of Trustees of Mutual Funds Association of Mutual Funds in India Sir/Madam, Subject: Alignment of interest of Asset Management Companies (AMCs) with the Unitholders of the Mutual Fund Schemes 1. Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2021 (MF Amendment Regu

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FAQ :

The main purpose is to align the interests of Asset Management Companies (AMCs) with the unitholders of mutual fund schemes by requiring AMCs to invest in their own schemes.

AMCs are required to invest a minimum amount in their mutual fund schemes, based on the risk associated with each scheme.

The minimum investment amount is determined as a percentage of the Assets Under Management (AUM) for each scheme, based on its risk value as per the risk-o-meter.

Yes, AMCs are not required to invest in ETFs, Index Funds, Overnight Funds, Funds of Funds schemes, and closed-ended funds where the subscription period has closed.

AMCs are responsible for ensuring compliance, and the Trustees will monitor it. Non-compliance must be reported in the Quarterly CTR and half-yearly Trustee Report.

Details of investment by AMCs in each of their mutual fund schemes shall be disclosed on the websites of the AMCs and AMFI.