How to invest in mutual funds in the new year, know these five important changes

With the opening of the new year (January 1, 2021) there have been many changes. One of these changes is about MF Investments. If you also invest in mutual funds, then it is important to know those five major changes that have come into effect from today. Market regulator SEBI (SEBI) has made some new rules to make mutual funds investment more transparent and safe for investors, which are coming into force from today.

Dividend option renamed

In the new year from April, mutual funds will have to change the name of dividend options i.e. dividend option to income distribution cum capital withdrawal. SEBI has directed all mutual fund companies to change the name of dividend options.

New rules of NAV calculation

1. From today, investors will get that day’s purchase of mutual funds only after the money reaches the NAV Asset Management Company, no matter how big or small the investment is.
2. SEBI (SEBI) has decided that day closing in all mutual fund schemes except liquid and overnight mutual fund schemes will be decided on the basis of funds available for NAV utilization.
3. As per the current rules, the purchase of less than Rs 2 lakh applies for that day’s NAV and the order is placed, whether the money has been delivered to the AMC or not.

Change in rules of inter scheme transfer

The inter-scheme transfer of debt papers of close-ended funds will have to be done by the investors within three business days of the unit being allotted. This rule is also applicable from today. Inter-schemes cannot be transferred after 3 days. In inter-scheme transfer, the debt papers can be shifted from one mutual fund scheme to another. According to Sebi regulations, the inter scheme transfer will be at market price.

New Riskometer Tool

1. Market regulator SEBI has added a new category named ‘very high’ to its riskometer tool. So that investors should be aware of the risk of mutual funds and take better decisions.
2. From today the old system will end in which only the category level risk was mentioned. However, the risk is different for a single scheme of a single category, which was not correctly defined as before.
3. But after the new rules of SEBI, the fund houses will have to disclose the risk of all schemes separately. That is, from January 1, 2021, all the schemes will have to be labeled separately, along with the fund houses will also have to inform the investors about these changes.
4. The risk-o-meter will be assessed on a monthly basis. All Asset Management Companies (AMCs) should disclose the risk-o-meter in the portfolio disclosure on their website and AMFI website 10 days before the end of every month.

Rules for portfolio allocation changed

1. In September, Sebi made some changes to the rules regarding portfolio allocation for the multicap equity mutual fund scheme. According to the new rules, 75% of the multicap mutual funds scheme will have to be invested in equity, which was 65% till now. Apart from this, these schemes will have to do 25-25% in largecap, midcap and smallcap shares.
2. Till now there was no such condition in the multicap fund category. Fund houses were given time till 31 January 2021 to fully implement it.
3. In view of the concerns of the mutual fund industry, market regulator SEBI has launched a new mutual fund category, named ‘Flexi cap fund‘. These funds will have to invest at least 65 per cent in equity and there will be no condition of any kind.
4. Some asset management companies have already converted their equity multicap schemes into ‘Flexi cap funds’, so that they do not have to make any changes in the portfolio.