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SEBI’s Liberalised MF Lite Framework
Context
SEBI has introduced the Mutual Funds Lite (MF Lite) framework to simplify the regulatory compliance for passively managed mutual funds.
What is SEBI’s liberalised MF Lite framework?
- The Mutual Funds Lite (MF Lite) framework is a new set of rules introduced by the Securities and Exchange Board of India (SEBI) to make it easier for companies to create and manage certain types of mutual funds, specifically passively managed ones like index funds and exchange-traded funds (ETFs).
- Simplified Rules: The MF Lite framework offers simpler regulations for passively managed funds.
- These funds follow specific rules for investing, so they don’t require as much oversight compared to actively managed funds, where managers make more decisions about investments.
- Encouraging New Players: By making it easier to start these types of funds, SEBI hopes to attract more companies to enter the mutual fund market. This means more options for investors.
- Faster Approval Process: The framework aims to speed up the approval process for new passive funds. This means that companies can launch their funds more quickly and without having to provide as much detailed information upfront.
- Cost-Effective: With less paperwork and quicker approvals, it will be cheaper for companies to set up new funds. This could lead to lower costs for investors as well.
- More Competition and Innovation: As new companies enter the market, there will be more choices for investors. This competition can lead to better investment options and potentially lower fees.
What are Passive funds?
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