Page 18 - Banking Finance October 2019

MUTUAL FUND

Axis Nifty 100 Index Fund SEBI imposes stern rules for debt mutual funds
by Axis Mutual Fund SEBI has recently tightened the norms for mutual funds and made it mandatory
for liquid schemes to hold at least 20% in liquid
Axis Mutual Fund has recently assets like cash and government securities in the
launched wake of recent credit crisis. Applicable from April
Axis Nifty 1 next year, the new rule is aimed at improving
100 Index
risk management and ensuring sufficient liquidity,
Fund, an the Securities and Exchange Board of India (Sebi)
open-ended said in a circular.
index fund
tracking the Nifty 100 index. The Apart from that, Sebi said that an asset management company (AMC) will not
new fund offer (NFO) will open for be permitted to charge investment management and advisory fees for the parking
subscription on September 27 and of funds in short-term deposits of scheduled commercial banks. This norm will
will close on October 11. be applicable after a month. Liquid funds will now be required to hold at least
20 per cent in liquid assets such as cash and cash equivalents like treasury bills
The minimum application amount
and repo on government securities, Sebi said.
for the Axis Nifty 100 Index Fund is
In case, the exposure in such liquid assets falls below 20% of net assets of the
Rs 5,000 and in multiples of Re 1
scheme, the AMC will have to ensure compliance with the requirement before
thereafter. The scheme will allow
investors to invest through SIPs, making any further investments. Further, the regulator also barred liquid and
STP’s and FlexSIP/STP in addition to overnight schemes from investing in short-term deposits, debt and money mar-
a lumpsum investments. ket instruments having structured obligations or credit enhancements facilities.
However, debt securities with government guarantee will be excluded from such
“Axis AMC has always believed in of-
restriction.
fering the best quality products to
the investor’s basis their needs and Kotak Mutual Fund and ICICI Prudential Mutual Fund
aims to deliver consistent perfor-
mance in every fund managed. The file documents 'ESG' schemes
overall aim is to build a complete After ESG schemes from Quantum Mutual Fund and SBI Mutual Fund, Kotak
product suite across the active and Mutual Fund and ICICI Prudential Mutual Fund have filed documents with Sebi
passive space and hence, we are for their ESG products. ESG investing includes building a portfolio of companies
continuously enhancing the product that meet high environmental, social and governance standards. Ideally, this is
basket with varied investment solu- what fund managers in all markets look for- companies that have high standards.
tions, keeping in mind the ever evolv-
Many market participants say that ESG as a concept is not tested in India yet.
ing needs of investors. We believe
Globally, ESG has been a success story, but mutual fund advisors say that maybe
that, there are a lot of opportunities it is too early for the Indian market to follow the developed markets. The other
in the market for long term invest- school of thought has a different opinion. “Many that shrug ESG as a new con-
ments and the Axis Nifty 100 Index cept, just fail to understand that ESG investing is a nothing more than a mea-
Fund will help investors seek signifi- sure of sustainability and our question to them is -since when did investing in
cant wealth creation opportunities,” sustainable good companies become a new thing,” asks Chirag Mehta, Fund
said Chandresh Kumar Nigam, MD &
Manager, Quantum Mutual Fund. Mehta manages the Quantum’s ESG Fund.
CEO, Axis AMC.
“It is definitely a good thing, but in terms of returns from investment, we are
Index funds are popular vehicles glo- not sure yet. Will it match the diversified equity products that we already have?
bally and have been attracting inter- That’s what we have to think about from the point of view of advisors and inves-
est from domestic investors as well tors,” says Vishal Dhawan, Founder, Plan Ahead Wealth Advisors. “Just like index
in recent years. These funds are a funds, Indian market will take time to check the viability and worth of ESG
low cost option for investors to par- schemes. For retail investors, thematic schemes are not advised. Especially, when
ticipate in a particular segment of
there is no past record about how these schemes will do in the market,” says
the market.
Puneet Oberoi, Founder, Excellent Investment Advisors.
18 | 2019 | OCTOBER | BANKING FINANCE