mutual funds investment policies and restrictions by sebi

The Mutual Fund will buy and sell securities on a delivery basis. Securities purchased will be transferred in the name of
the Mutual Fund on account of the respective scheme.
– The Mutual Fund shall not advance any loans.
– The scheme will not invest in any unlisted or privately placed securities of any associate or group company of the
sponsor. Investment in listed securities of the group companies of the sponsor will be limited to 25 percent of the net assets.
– The Scheme may invest in other schemes of the same Mutual Fund or other Mutual Funds. This will be limited to not
more than 5 percent of the net asset value of the scheme. No fees will be charged on such investments. This does not apply to
Fund of Funds.
– The Mutual Fund under all its schemes shall not own more than 10 percent of a company’s paid up capital bearing
voting rights
· Restrictions pertaining to investment in Debt Securities:
– The Scheme shall not invest more than 10 percent of its NAV in investment-grade debt instruments issued by a single
issuer. This can be extended to 12 percent with the approval of the trustees. The limit shall not apply to Government Securities,
Treasury Bills and CBLO.
– Investment in unrated debt securities of a single issuer will be limited to 10 percent of its net assets and the total
investments in such securities shall not exceed 25 percent. These limits shall not apply to investments in Government
securities, treasury bills and CBLO.
– Parking of funds in Short-term deposits with all scheduled commercial banks shall be limited to 15 percent of the net
assets of the scheme. This can be raised to 20 percent with the approval of the trustees. The Scheme cannot invest in shortterm
deposits of a bank that has invested in the scheme. No management fee will be charged for such investments bythe
scheme.
· Restrictions pertaining to investment in Equity:
– The ELSS notification requires that at least 80 percent of ELSS funds should be invested in equity and equity-linked
securities.
– The Scheme shall not invest more than 10 percent of its net assets in the equity shares and equity-related instruments
of one company.
– Not more than 5 percent of the net assets of the scheme shall be invested in unlisted equity shares or equity-related
instruments.
· Investment Policy and objective form part of the offer documents while investment strategy does not.
· Schemes other than ELSS and RGESS can remain open for subscription for a maximum of Fifteen (15) days.
· In the case of RGESS schemes, the offering period shall not be more than thirty (30) days.
· Schemes other than ELSS and RGESS need to allot units or refund the money within 5 business days of closure of the
NFO. RGESS schemes are given a period of 15 days from the closure of the NFO to make the refunds.
· If the minimum amount required to operate the scheme is not collected from NFO, then the money has to be returned
within SIX Weeks. In the event of delays in refunds, dividend warrants or redemption/repurchase cheques, investors
need to be paid interest at the rate of 15% p.a. for the period of the delay. This interest cannot be charged to the
scheme.
· Open-ended schemes, other than ELSS, have to re-open for ongoing sale / re-purchase within 5 business days of
allotment.