If you are an active investor in Indian exchange-traded funds and index funds, you have a new option. A “lite” investment product, if we may.
India’s market watchdog unveiled some “light touch” rules for companies launching passive mutual funds on Tuesday.
So, what’s the MF Lite framework all about? It basically loosens the rules for companies, cutting down compliance requirements like how much money they need, their past performance, and how much they must disclose. The Securities and Exchange Board of India says the new product will crack down on shady, unregistered investment schemes that promise sky-high returns and leave investors at risk.
It’s all about keeping money safe and avoiding unrealistic promises.
By the numbers
An investor will need to put a minimum of Rs 10 lakh ($11,929) per strategy with any asset management company offering the new product.
SEBI dropped this news back in July 2024, but here’s why you should care:
- With fewer rules, managers can save money, and hopefully pass those savings to individual investors by charging lower fees.
- Easier entry for new players means more passive fund options, which means more investment choices for you.
- More funds entering the market could make it easier for small investors to buy and sell without affecting prices too much.
What market experts said
Deepak Shenoy, CEO of Capitalmind, said on X that “mutual fund aspirants should definitely check out MF Lite”.
Dev Ashish, founder of investor advisor platform StableInvestor, wrote on X that “the new asset class is like a mini portfolio management service for retail and is structurally positioned between mutual fund and PMS.”
