Click to play videoNew Delhi: Mutual funds could invest twice as much as they do in public offers, including IPO's. Sebi's proposal could mean a safer option for retail investors for entering the market.
Market regulator Sebi seems to have decided to ring in some changes. Following the Finance Minister’s cue, the regulator has proposed to double the quotas for mutual funds in IPOs and public offers.
This means mutual funds could enjoy a 10 per cent quota instead of the current 5 per cent.
UTI Chief Investment Officer A K Sridhar said, “This is one way by which the retail investor can actually participate through the benefit going through the IPO and through the mutual fund. The other added thing is mutual fund investors in any IPO or any stock for that matter is fairly a long term investment.”
But government has made it clear there won't be change in the quotas offered to retail investors directly. However banks other financial institutions and High net worth individuals or HNI's might lose their share of reserved quotas.
After the demat scam everybody felt that the retail quota should be abolished but the finance ministry and the Sebi think otherwise. They also feel that abolishing the retail quota will send a wrong message. They want that the retail cult should be developed. An increase in the quota for mutual fund will certainly help in that direction.
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