SEBI lowers exposure cap for investments by MF
Q. SEBI has lowered the exposure cap for investments for which type of funds?- Published on 12 Jan 16a. Long term funds
b. Short term funds
c. MF
d. None of the above
ANSWER: MF
With attempts for making MF reduce exposure to issuer or sector in the debt schemes, capital market regulatory authority SEBI has lowered the exposure cap for such investment of MF. SEBI Board has amended MF regulations for single issuer limit reduced to 10%of NAV of the scheme. It can be increased to 12% of the NAV only following approval from trustees. Sector specific exposure limit has been reduced to 25% from current 30%. SEBI norms have indicated that risks will be mitigated on the basis of high level of exposure in the light of events associated with credit downgrades and place MF in a better position to handle adverse credit events.
