Context:
The eligibility criteria for the passively managed mutual funds have been issued by the Sebi in order to provide some eased rules.
Key Highlights:
- Aim
- To reduce compliance effort, increase competition and provide easier entry for less risky schemes.
- The rules have been approved in September for the separation of passive funds.
- Passive funds are pooled investments that aim to match the performance of a market index. Passive investors don’t assess the value of individual investments, but instead try to replicate the index’s returns.
- MF Lite: MF Lite is a framework for mutual funds that focuses solely on passive investment products, which include index funds, ETFs, funds of funds (FoFs), and more.
- Passive funds with an AUM of ₹ 5,000 crore or more shall qualify for “MF Lite” based on domestic equity indices.
- Only private equity funds can sponsor passive funds for the MF Lite category.
