Home / Mutual Funds / News /  Sebi reviews framework for debt ETFs and index funds

Markets regulator Sebi has come up with new norms for passive debt exchange traded funds (ETFs) and index funds as they gain popularity among investors.

Debt ETFs/Index Funds could be based on indices comprising of corporate debt securities (Corporate debt indices) or government securities (G-secs), t-bills or a combination of both (hybrid debt indices).

For Debt ETFs/ Index Funds, the AMCs must ensure the constituents of the index are aggregated at issuer level for the purpose of determining investment limits for single issuer, group, sector, etc, Sebi said.

For corporate debt ETFs/Index Funds, investment in securities of issuers accounting for at least 60% of weight in the index, represents at least 80% of net asset value (NAV) of the fund.

Further, at no point of time the securities of issuers not forming part of the index exceed 20% of NAV of the fund.

The regulator has allowed mutual funds to launch passive equity-linked savings scheme (ELSS) funds. The passive ELSS scheme must be based on one of the indices comprising of equity shares from top 250 companies in terms of market capitalization.

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