Skin in the game: MFs have bet over Rs 80,000 cr on their own schemes

This has meant that the share of total assets has fallen to 1.8 per cent in March 2023 from 3.4 per cent in March 2019 as seen in chart 1 (click image for interactive chart).

The contribution appears to be higher than what is mandated by the Securities and Exchange Board of India (Sebi). The market watchdog has over the years introduced regulations to ensure that mutual fund houses invest some of their own money along with their investor’s capital in the schemes they run. In 2014, it asked mutual funds to invest Rs 50 lakh in new funds. It sought to pay a portion of mutual fund employee compensation in the form of scheme units, and also brought in additional norms on fund houses allocating their money alongside investors in 2021. The minimum investment was in the range of 0.03-0.13 per cent of assets, depending on the scheme’s risk profile.

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Fund house sponsors and associates had invested Rs 70,000 crore – most of their allocations– in debt schemes as of July 2023. The share of equity funds is rising: It was 6.5 per cent in March 2019 and is 9.3 per cent now. The share of debt schemes has fallen from 92.6 per cent to 82.2 per cent in the same period. Balanced and exchange traded funds have seen their share rise from under 1 per cent to between 1-5 per cent (chart 2).

Fund house sponsors and associates had invested Rs 70,000 crore – most of their allocations– in debt schemes as of July 2023. The share of equity funds is rising: It was 6.5 per cent in March 2019 and is 9.3 per cent now. The share of debt schemes has fallen from 92.6 per cent to 82.2 per cent in the same period. Balanced and exchange traded funds have seen their share rise from under 1 per cent to between 1-5 per cent (chart 2).