The Association of Mutual Funds of India (Amfi) has recommended that open ended schemes should have a minimum of 20 investors and that any single investor cannot hold more than 25 per cent of the total portfolio of the scheme. Industry sources said the idea is to ensure that the holding is as diversified as possible.
The proposals will be shortly submitted to the Securities and Exchange Board of India, which is expected to take decision on it in two weeks.
If the recommendations are implemented it will take effect prospectively. Existing schemes will be given three months to comply with the new regulations failing which they will have to wind up the schemes.
Some other recommendations which have been made by the association include introduction of average assets under management for computing the assets at the end of every month.
Funds have the habit of indulging in last-minute mechanics to shore up their holdings and show a respectable asset base at the end of the every month.
In order to stop this jugglery, which is not a true reflection of the actual state of affairs, Amfi has decided that the average assets throughout the month should be taken and this should be disclosed on a periodic basis.
