Discussion at 'nascent stage': AMFI responds to SEBI's proposed 'high-risk' mutual fund category

Notably, SEBI on Thursday proposed the introduction of a new mutual fund category that presents investors with the opportunity for potentially higher returns, albeit with higher risk.

A person with knowledge of the matter said that SEBI is concerned that many investors- in the race to earn higher returns (out of greed)- rush to high-risk Portfolio Management Services and sometimes to unregistered advisors.

This proposal was initially presented during a meeting with the Association of Mutual Funds of India (AMFI), and SEBI subsequently reached out to AMFI for internal deliberation regarding the feasibility of such a category.

"With reference to the recent media reports published regarding the proposal to introduce a new mutual fund category that comes with high-risk and higher minimum investment it is clarified that there is a whole spectrum of products in the securities market in terms of the risk and the applicability of prudential norms," AMFI statement said.

For instance, given the retail participation in Mutual Funds, prudential norms applicable to Mutual Funds are higher, as compared to others investment instruments, where prudential norms are flexible in line with ticket size of investment," AMFI said.