Sebi approves new rules to widen investment avenues

Mumbai: The Sebi board on Thursday approved new regulations for portfolio managers, allowing investment in foreign securities, and a revamped settlement framework, while permitting foreign portfolio investors to participate in a wider range of exchange-traded commodity derivatives.Under the new rules, the regulator would be introducing a portfolio manager route for investing in mutual fund units, enabling portfolio managers to invest clients' funds in direct plans of mutual funds, including ETFs, index funds and specialised investment funds. The minimum ticket size would be ₹25 lakh, while fixed management fees would be capped at 1% of client assets under management(AUM)."The introduction of PRIM - allowing portfolio managers to offer mutual fund and SIF-based strategies - meaningfully widens access and brings more investors into a well-regulated, professionally managed framework," said Vikas Khemani, founder, Carnelian Asset Managment.Read more: Sebi clears PRIM route for PMS players to invest in mutual funds, SIFs; Rs 25 lakh minimum ticketThe regulator would also allow portfolio managers to invest in initial public offerings and primary issuances in the debt market. They would also be allowed to invest up to 10% of a client's AUM in investment grade, non-convertible unlisted debt securities under discretionary PMS(portfolio management services).Vikas Khemani said this gives managers flexibility to construct better risk- adjusted portfolios.The framework provides greater flexibility for investment in exchange-traded derivatives, allowing exposure of up to 1.25 times the client's AUM. It also permits investment in foreign securities under discretionary and non-discretionary PMS, including listed equity and debt, REITs, overseas mutual funds, exchange-traded funds, index funds and foreign government debt.Anshul Sharan, co-founder and chief executive of Ametra PMS said, the expanded investment universe would significantly broaden the reach of PMS.Read more: Sebi board approves FPI play in non-agri commodity derivatives, expands scope of PMSThe new PMS framework also introduces independent fund managers who can manage client portfolios in association with registered portfolio managers. The registered portfolio manager will retain full responsibility and liability for the activities of the independent fund manager.Aditya Agarwal, co- founder of Wealthy.in, a wealth management platform said, the new avenues would open up a wider set of people being able to offer fee based management of fund portfolios which was previously available only to investment advisers.