India’s securities regulator has introduced a slew of new asset management rules, including allowing equity funds to invest in gold, silver, infrastructure and debt, and unveiled a framework for life cycle funds.
Equity funds can now invest up to 35% of their non-core allocation in gold funds, silver funds, infrastructure investment trusts, and debt instruments.
“This gives fund managers much more flexibility rather than just holding on to cash when the market is uncertain,” the Securities and Exchange Board of India (Sebi) says in a circular on March 6.
Other measures announced in the circular include a requirement for thematic funds and sectoral funds to invest at least half their assets in the specific sector or theme.
Fund houses will also have to disclose portfolio overlaps across equity, debt, and hybrid segments every month.
“This helps avoid over-diversification, a common problem where investors think they are spread across funds but are just doubling up on the same underlying assets without knowing it,” Sebi says.
Meanwhile, the framework for life cycle funds paves the way for asset managers to offer the funds to retail investors looking to save for the longer term, usually for retirement.
Asset allocation in life cycle funds automatically adjusts from higher to lower risk according to the age of investors, with a higher share in stocks when they are younger, to more bonds when they near retirement.
Sebi says life cycle funds can have terms ranging from five to 30 years.
