SEBI to make nomination optional for joint Mutual Fund portfolios? Details here

Investments made by mutual fund schemes in sponsor group firms are limited to a maximum of 25% of net assets, as per existing regulations. Furthermore, for a sectoral or theme index-based passive fund, no single stock may hold more than 35% of the weight in the underlying index.

The Working Group on Ease of Doing Business has recommended that the current 25% sponsor group exposure limit be relaxed, given that the exposure to a single issuer for some sectoral indices may exceed 25% and that passive funds are needed to replicate the corresponding underlying index.

SEBI has suggested that Exchange-Traded Funds with an equity focus and index funds that are based on widely tracked and non-bespoke indices be exempt from the requirement of having a 25% investment limit in sponsors' group companies. This will allow investments to be made under the weightage of the underlying index's constituents, preventing any inadvertent tracking errors, The Hindu BusinessLine reported.

The mandatory nomination date for investments in mutual fund schemes was recently extended by SEBI to June. If the nomination is not submitted by the deadline, the folio shall be frozen for debit.

For jointly held folios, on the other hand, the surviving holder shall take precedence over the nominee during unit transmission.