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Investing.com -- India’s market regulator proposed a rule change Monday that would allow asset management companies to offer services to pooled funds with limited investors, such as family offices or offshore funds.
The Securities and Exchange Board of India (SEBI) suggested that portfolio management and advisory services could be offered through a separate unit of the asset management company, provided it maintains its own dedicated team of key personnel.
Current regulations, implemented in 2011, prohibit AMCs from managing or advising non-broad-based pooled funds unless they possess a Portfolio Management Services license. This restriction was originally put in place to prevent conflicts of interest, particularly regarding fee structures.
The difference in fee structures represents a key concern, as mutual fund fees are regulated, while private funds can operate with performance-linked or negotiable fee arrangements.
SEBI emphasized that the proposed changes would be subject to strong governance and regulatory controls designed to address any potential conflicts of interest, with special attention to protecting retail mutual fund investors.
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