The Association of Mutual Funds in India (AMFI), an industry body for asset management companies, issued an advisory to AMCs over disclosure of risk parameters on their websites, reported CNBC-TV18 on February 29 quoting sources. AMCs are likely to disclose risk parameters of mid- and small-cap equity mutual fund schemes on their websites, the channel reported.
AMCs have to disclose result of stress test and liquidity, volatility, valuation and portfolio turnover, reported CNBC-TV18. These risk parameters have to be disclosed within 15 days after each other month, said CNBC-TV18.
For February 2024, disclosures will likely be done by March 15, 2024. Required disclosures are standard deviation, portfolio beta, portfolio trailing PE and portfolio turnover, reported CNBC-TV18.
On February 27, AMFI asked AMCs to moderate inflows into small- and mid-cap funds and protect investors from large outflows, after strong inflows raised concerns of a potential crash.
Following a communication from market regulator Securities and Exchange Board of India (SEBI), AMFI made the request in a letter dated February 27.
India's small- and mid-cap funds have seen high inflows, causing concern among authorities about how they would hold up in the event of a sharp market selloff.
Mutual funds keep between 1% and 5% of their assets as cash to meet outflows but there is no minimum regulatory requirement.
Funds need to invest at least 65% of their assets in small-cap stocks to be categorised as a small-cap fund and the remaining 35% can either be in cash or invested in large-cap stocks. The rule is similar for mid-cap funds.
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