MF merger likely post Sebi norms

Markets watchdog Sebi had on Friday asked mutual funds to categorise all their schemes within 5 baskets, in a bid to weed out multiple fund launches on similar themes

The Sebi's decision to categorise the number of similar mutual fund schemes and to cap 'me-too' products will result in a reduction of the number of funds to 1,300 from around 2,000 products now. Markets watchdog Sebi had on Friday asked mutual funds to categorise all their schemes within five baskets, in a bid to weed out multiple fund launches on similar themes. The Sebi move is expected to make it easier for customers, who are now faced with plethora of choice of over 2,000 funds managed by 41 fund houses in the over Rs 20 trillion MF industry, feel industry experts.

The decision will also lead to consolidation in equity funds as most of the AMCs hold more than one funds in the same sub category now. The over Rs 20 trillion AMC industry has 41 players. But three AMCs handle only infrastructure debt funds, hence the total number of fund houses to be affected will be 38, as per the industry body Amfi. Under the Sebi classification, which broadly caps the fund categories to five, that are sub-divided into 36 categories, will see that total number of funds will come down 1,368 from over 2,000 now, Jeevan Kumar, head of investment advisory business at Geojit Financial Services, told PTI.

This is in a situation where all the 41 AMCs maintain one scheme each under 36 sub-categories as of the 41 fund houses only 38 have multiple funds with three of them --IFCL AMC, IL & FS AMC and Srei Mutual Fund -- having only infra debt funds, Kumar said. The AUM in equity MF of individual investors has grown by 48 pc in June this year.