Topic 6: MUTUAL FUNDS: SUSTENANCE

In May 2026, the Indian mutual fund industry, commanding over ₹70 lakh crore in assets under management (AUM), underwent a major operational overhaul. Fund houses aggressively adapted to the newly enforced SEBI (Mutual Funds) Regulations, 2026,

which introduced sweeping structural changes aimed at increasing transparency and curbing retail mis-selling. A primary focus for Asset Management Companies (AMCs) was transitioning to the Base Expense Ratio (BER) framework. Moving away from a consolidated Total Expense Ratio (TER), AMCs updated their billing architecture to isolate core management fees from external transactional costs like brokerage, STT, and stamp duties. This separation explicitly reveals what investors pay for active fund management versus trading friction. Simultaneously, fund managers spent the month rebalancing portfolios to eliminate product duplication. Under strict new mandates, an AMC's thematic or sectoral equity schemes are now legally barred from sharing more than a 50% portfolio overlap with its other existing equity funds. Marketing strategies also saw a massive shift as SEBI forced the retirement of generic, "goal-based" labels. Traditional marketing gimmicks like "Children's Benefit" or "Retirement Plans" were completely phased out. In their place, the industry pivoted toward Life-Cycle Funds, which utilize scientific, age-based asset allocation that systematically de-risks by scaling down equity exposure over time. To combat intense market volatility, equity managers heavily utilized enhanced macro-buffers. A new regulatory provision allowed them to allocate up to 35% of non-equity assets into gold and silver ETFs, creating vital internal safety nets. Despite this heavy regulatory restructuring, the market remained active. The month closed with a notable surge in targeted New Fund Offers (NFOs), prominently led by passive thematic entries like the Kotak Nifty India Defence Index Fund and the HDFC Nifty Auto Index Fund.



Top | Back
The information contained herein (the “Information”) may not be reproduced or disseminated in whole or in part without prior written permission from the Company. The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared based on publicly available information, internally developed data and other sources believed to be reliable. The directors, employees, affiliates or representatives (“Entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy, reliability and is not responsible for any errors or omissions or for the results obtained from the use of such information. Readers are advised to rely on their own analysis, interpretations & investigations. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements including those relating to general business plans and strategy, future financial condition and growth prospects, and future developments in industries and competitive and regulatory environments. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, they do involve several assumptions, risks, and uncertainties. Readers are also advised to seek independent professional advice to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this document shall not be liable in any way for direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of the lost profits arising from the information contained in this material. Readers alone shall be fully responsible for any decision taken based on this document.
Copyright © 2024 Fintso