Page 13 - Banking Finance March 2025

MUTUAL FUND

Govt meet to discuss fund

for startups
The department for promotion of in-
dustry and internal trade (DPIIT) is
holding a meeting with alternate in-
vestment funds (AIFs) here to discuss
ways to promote funding for startups Ò»©­
in the country, an official said. The of-
ficial added that as many as 75 AIFs are
expected to participate in the delibera-
tions. Issues like capital mobilisation
and promoting funding for startups in
smaller cities will be discussed during
the meeting, the official added.
Under the Centre's Fund of Funds Six things to know before investing in arbitrage
Scheme (FFS), support is extended to funds
Sebi-registered AIFs, which in turn in- Arbitrage funds have emerged as an attractive investment option in India,
vest in startups.
particularly for those seeking lower risk and consistent returns amid mar-
ket volatility. These mutual funds capitalise on price discrepancies between
Sebi to revamp MF nomi- the cash and derivatives markets, allowing investors to lock in profits with

nation minimal exposure to risk.
Markets regulator Sebi issued guide- Arbitrage funds use a hedged strategy, buying securities in the cash market and
lines to revamp the nomination process simultaneously selling them for future settlement to minimises risk. Returns are
for mutual fund folios and demat ac- based on price differences rather than market direction. Around 65-85 per cent
counts to enhance transparency and of the portfolio is invested in large cap stocks with arbitrage Potential. Around
minimise unclaimed assets in the secu- 15-35 per cent is allocated to corresponding futures contracts.
rities market. Algorithms automatically identify and execute arbitrage opportunities, ensuring
The new norms will come into effect quick action without manual intervention. Arbitrage funds thrive in volatile
from March 1 and cover a range of markets but may offer below-average returns when markets are flat.
measures for investors and regulated
entities, including Asset Management debt MF offering which will invest in
Companies (AMCs). SBI MF floats Nifty Bank short-term debt instruments such that
Index Fund
The Securities and Exchange Board of the Macaulay duration of the portfo-
India (Sebi) emphasised that these re- SBI Mutual Fund (MF) announced the lio is between 1 year to 3 years. Debt
forms came from extensive consulta- launch of Nifty Bank Index Fund, an funds including short duration funds, in
tions with stakeholders, including a equity scheme which will track the addition to, accrual returns offer the
public consultation paper floated in Nifty Bank index. potential for mark-to-market gains
February 2024. According to the fund house, the fund when interest rates decline, the fund

"In order to revise and revamp the is aimed at providing investors with the house said.
norms for nomination for demat ac- opportunity to invest in the largest and
counts and mutual fund (MF) folios and most influential banks in India, which SEBI issues new norms on
to prevent the generation of un- continue to lead and transform the unclaimed funds, securi-
claimed assets in the securities market, nation's banking sector.
Sebi came out with a consultation pa- Union Mutual Fund (MF) announced ties
per in February 2024. the launch of a short duration fund, a The Securities and Exchange Board of

12 | 2025 | MARCH | BANKING FINANCE