The Securities and Exchange Board of India (Sebi) has approved a new and simplified regulatory framework for all entities which launch only passive mutual fund schemes called the liberalised Mutual Funds Lite (MF Lite) framework, according to a Business Standard report, which added that this is to reduce compliance requirements as well as encourage the presence of new market players. The combined assets under management (AUM) of India’s mutual fund industry grew over seven times to ₹ 61.2 lakh crore in June 2024, compared to ₹ 8.3 lakh crore in December 2013 What is the difference between passive and active funds?
The industry’s growth is attributed to the increasing popularity of passive funds, which have seen a surge in investments. ## The Rise of Passive Mutual Funds in India The Indian mutual fund industry has witnessed a significant transformation over the past few years, with passive mutual funds emerging as a dominant force. In June 2024, the combined assets under management (AUM) of these funds reached a staggering ₹61.2 lakh crore, marking a seven-fold increase from previous years. This growth trajectory underscores the increasing popularity of passive funds among investors.
Streamlining the Approval Process for Passive Mutual Fund Schemes
The financial industry is set to undergo a significant transformation with the upcoming changes to the approval process for launching new passive mutual fund schemes. This initiative aims to streamline and simplify the process, making it more efficient for mutual fund houses to introduce new investment options to the market. ### Simplifying Compliance Requirements One of the key aspects of this reform is the easing of compliance requirements.
# Introduction to MF Lite
The mutual fund industry has long been dominated by established players, making it challenging for new entrants to gain a foothold. However, the introduction of the MF Lite framework aims to change this landscape. ### Simplifying Entry for New Players
- The MF Lite framework is designed to streamline the process of entering the mutual fund industry. * It reduces the complexity of regulatory requirements, making it easier for new players to comply.
This move can lead to a more focused and efficient operation. ## The Impact of Market Diversity on Liquidity and Competition The financial market is a complex ecosystem where various entities interact to facilitate the buying and selling of securities.
This move is aimed at enhancing transparency and compliance with regulatory requirements. ## The Shift Towards Transparency in Asset Management The asset management industry is undergoing a significant transformation. One of the key changes is the separation of passive schemes from active ones.
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