Topic 6: MUTUAL FUNDS: READY INFO

In March 2025, the Indian mutual fund industry witnessed strong performance, primarily driven by a sharp rally in equity markets and sustained investor participation. Equity mutual funds delivered impressive returns, with the HDFC Defence Fund leading at 22% for the month. PSU-themed funds also posted solid gains of around 13–16%, while small-cap and mid-cap funds benefited from strong market momentum. The Sensex rose 5.76% and the Nifty 50 gained 6.30%, while the Nifty Mid-Cap and Nifty Small Cap surged 7.84% and 9.49% respectively, fuelling returns in related fund categories. Retail investor interest remained high, especially in the small and mid-cap segments. While March data for SIP inflows and AUM is pending, February’s AUM stood at ₹64.53 trillion, indicating a five-fold growth over the past decade. Overall, the mutual fund industry in March thrived on favourable market conditions and robust retail investor sentiment. The mutual fund industry in India is currently undergoing significant regulatory changes introduced by the Securities and Exchange Board of India (SEBI). One of the key updates pertains to the deployment timeline for funds collected through New Fund Offers (NFOs). SEBI has now made it mandatory that the money raised via NFOs must be invested or deployed within a strict period of 30 business days from the date on which the units are allotted to investors. This rule is intended to ensure timely and efficient utilization of investor funds. In situations where an Asset Management Company (AMC) is unable to meet this 30-day deployment requirement, there is an option to apply for an extension. However, this extension is allowed only once and is limited to an additional 30 business days. Furthermore, such an extension must be approved by the AMC’s Investment Committee. If, despite the extension, the funds are not deployed within the total window of 60 business days, SEBI has laid down specific consequences. The AMC in question will be required to immediately halt all fresh inflows into the concerned scheme. Additionally, investors must be allowed to exit the scheme without incurring any penalties or exit loads, and the AMC must communicate this situation clearly to all investors. In another major development, SEBI has introduced a new category of investment vehicles called Specialised Investment Funds (SIFs). These funds are positioned between the traditional Mutual Funds and Portfolio Management Services (PMS), offering a unique middle ground for investors. SIFs come with more flexible and tailored investment strategies compared to regular mutual funds, but they also have stricter entry requirements. To invest in a SIF, an individual must commit a minimum investment of ₹10 lakh. Moreover, only those AMCs that have consistently maintained Assets Under Management (AUM) of ₹10,000 crore or more for the last three financial years are eligible to launch and manage SIFs. This criterion ensures that only well-established and experienced fund houses can offer such specialized investment products. Another notable initiative introduced by SEBI is the integration of mutual fund holdings with DigiLocker, a government-backed digital storage platform. This move is aimed at streamlining the record-keeping and accessibility of financial assets for investors. With this integration, investors will be able to store and easily access their statements related to Demat accounts and mutual fund holdings in digital format. This step is expected to significantly reduce the number of unclaimed assets in the financial system and also simplify the process for nominees to access the investments of a deceased investor. It enhances transparency, reduces paperwork, and adds a layer of convenience and security for investors and their beneficiaries.



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