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Market watchdog SEBI has come out with a consultation paper in a bid to ease the functioning of <keyword id="22476006" type="General" weightage="100" keywordseo="ESG-Rating-Providers" source="keywords">ESG Rating Providers</keyword> (ERPs), pushing for the development of a <keyword id="23760035" type="General" weightage="20" keywordseo="subscriber-pays-model" source="keywords">subscriber-pays model</keyword>. As of July 2024, nine ERPs are registered with SEBI to operate in the country. These include <keyword id="23760037" type="General" weightage="20" keywordseo="CRISIL-ESG-Ratings" source="keywords">CRISIL ESG Ratings</keyword> &amp; Analytics, ESG Risk Assessments and Ratings, GlobeTrend Climate Impact Institutional Investor Advisory Services, <keyword id="23760038" type="General" weightage="20" keywordseo="NSE-Sustainability-Ratings" source="keywords">NSE Sustainability Ratings</keyword> and Analytics, PGS Impact, Pragati Development Consulting, CARE ESG Ratings, and SES ESG Research. Per the paper's proposal, ERPs won't be required to disclose ESG (environmental, social, and governance) ratings to the bourses, provided they confirm that there is no non-public information that could potentially affect the rating. Another proposal was the simultaneous sharing of the ESG rating reports both to the rated companies and to the subscribers who pay to access these reports. ERPs should ensure that rated entities, their group companies, or associates cannot subscribe to their own ESG ratings, SEBI said in its consultation paper. Some of the other suggestions put forth by SEBI include: 1. Companies will have a specific timeframe to respond to the ESG report, and any such comments should be included in the report as an addendum. 2. In case the ERP does not agree with the remarks issued by the rated company, they can add their comments to the report as well. 3. ERPs can rate unlisted issuers or other products, provided they meet specific guidelines from relevant regulators. SEBI is receiving public comment on these proposals until November 15, 2024. <h2>Steady returns </h2>Of the 11 ESG mutual fund schemes available to Indian mutual fund investors, the Quant ESG Equity fund has generated the highest returns of about 45.44% over one year, data from ValueResearch showed. Simply put, had you invested Rs 10,000 every month in this fund for three years, you would have accumulated a corpus of Rs 5,47,525. Over three years, the returns on this fund come to around 26%. This was followed by the ICICI Pru ESG Exclusionary Strategy fund, which yielded 44.73% returns over the same period. However, over ultra-short terms, i.e., 1-3 months, ESG funds have largely delivered negative returns, underscoring their suitability only as a long-term investment avenue. Only the SBI ESG Exclusionary Strategy Direct Fund and Quantum ESG Best In Class Strategy Direct Fund have been around for 5 years, during which they have generated returns of about 16.67% and 18.7%, respectively. <keyword id="23760036" type="General" weightage="20" keywordseo="ESG-mutual-funds" source="keywords">ESG mutual funds</keyword> typically select and invest in companies that are ESG-compliant, i.e., who weave in environmental conversation, social welfare, and robust <keyword id="20392393" type="General" weightage="20" keywordseo="corporate-governance" source="keywords">corporate governance</keyword> practices into their working philosophy and work ethos, while simultaneously generating decent financial returns for stakeholders as well.

SEBI mulls measures to facilitate ease of doing business for ESG Rating Providers (ERPs)

Both mid-cap and small-cap mutual fund schemes have continued to attract significant investor interest, having garnered about Rs 30,350 crore in inflows during the April-September period of the current financial year. Last year, as data from <keyword id="6359050" type="General" weightage="20" keywordseo="AMFI" source="Orion">AMFI</keyword> showed, the total inflows in both these segments during the same period were only marginally higher at Rs 32,924 crore. Data from Value Research suggests that mid-cap funds have generated 46.25% returns over the past year, while small-cap funds have yielded returns worth 44.17% during the same time. This is far better than their 3-year returns, which stand at 20.67% for midcaps and 21.64% for smallcaps. The returns further moderate over 5 years to 32.44% for small caps and 27.94% for midcaps. Inflows in mid- and small-cap funds have only grown from strength to strength during the current year, despite market watchdog <keyword id="35210" type="General" weightage="20" keywordseo="SEBI" source="Orion">SEBI</keyword> repeatedly highlighting the high risks both these categories entail. Between January and March 2024, small-cap funds saw inflows worth Rs 6,085.27 crore, while mid-cap funds were a little behind, garnering inflows worth Rs 4,887.05 crore. Between April and June this year, small-caps saw inflows worth Rs 7,196.8 crore. At the same time, midcaps saw inflows worth Rs 6,926.60 crore. In line with this increase in inflows, the number of investors (folios) in the two schemes shot up by 1.32 crore year-on-year to nearly 4 crore in the six-month period ended September 30, 2024. Since 2020, the small-cap universe (i.e., companies with a market cap of less than Rs 2000 crores) has grown nearly fourfold, offering investors a wide range of investment opportunities. Data from Trust Mutual Fund also shows that small-cap funds have also emerged as great generators of long-term wealth. Between August 2014 and August 2024, the <keyword id="6354813" type="General" weightage="20" keywordseo="Nifty" source="Orion">Nifty</keyword> 100 total return index (TRI) has yielded a CAGR of 14.7%. In contrast, the Nifty smallcap 250 TRI has registered a CAGR of 18.2% "Small caps will continue to grow at a faster rate for years to come. I expect the inflows to continue as Indians want to invest in the high-growth sectors. Small-cap funds should be seen as an integral part of one's portfolio allocation and not a tactical play," Trust Mutual Fund CEO Sandeep Bagla told PTI. Individually, mid-cap funds saw an inflow of Rs 14,756 crore, and small-cap funds attracted Rs 15,586 crore in the first half of FY25. This aggregates the total inflow to Rs 30,342 crore, the data showed. In addition, the stress test in March 2024 has also played a role, reinforcing confidence by ensuring that fund managers are prepared to handle market volatility, Feroze Azeez, Deputy CEO, Anand Rathi Wealth Ltd, said. "With the mid-cap and small-cap segments projected to grow at 20 percent and 25 percent, respectively, in FY25, we expect inflows to remain strong, especially as SIP inflows continue to hit new peaks," he told media.

Investors pour in Rs 30,350 crore in mid and small cap funds in the first half of 2024

Markets regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords" meta.keywordsubtype="org" meta.entityname="Sebi" meta.hostid="153" meta.entityid="Sebi">SEBI</keyword> has asked the <keyword id="20677983" type="General" weightage="20" keywordseo="mutual-fund-industry" source="keywords">mutual fund industry</keyword> to proactively conduct stress tests, a key component of <keyword id="20383727" type="General" weightage="20" keywordseo="risk-management" source="keywords">risk management</keyword> for the financial sector, which will help strengthen the ecosystem, its whole-time member Ananth Narayan Gopalakrishnan said on Friday. The regulator's stress testing emphasizes the need to assess and manage liquidity risks, especially in small and midcap equity schemes. Speaking at a mutual fund event, Gopalakrishnan highlighted the importance of modelling stress scenarios not just for individual schemes or fund houses, but for the entire mutual fund ecosystem. "It is also important to model stress scenarios for the entire composite mutual fund ecosystem. I would strongly encourage the industry and <keyword id="20090036" type="General" weightage="20" keywordseo="AMFI" source="keywords" meta.keywordsubtype="org" meta.entityname="AMFI" meta.hostid="153" meta.entityid="AMFI">AMFI</keyword> to take the lead and proactively conduct objective and credible industry wide stress tests. themselves," Gopalakrishnan said. He also emphasized the need to find better ways to communicate the risks associated with different mutual fund schemes. The SEBI official mentioned that while the current risk measurement system is straightforward and has had a significant impact, it doesn't fully capture the differences in risks among various investment schemes. According to him, many schemes are just labelled as high risk, even though they have different kinds of risks. The goal is to improve this system to better reflect those differences, while keeping it simple and easy to understand. One possible approach is to consider the portfolio's volatility and liquidity from stress tests to give a clearer picture. "While ensuring simplicity and ease of understanding remains a key objective, perhaps the underlying volatility of the portfolio along with the liquidity of the portfolio from stress tests could be used to provide better colour all around," he added. This comes at a time when the holdings of mutual funds by <keyword id="20234284" type="General" weightage="20" keywordseo="domestic-institutional-investors" source="keywords">Domestic Institutional Investors</keyword> (DIIs) and individuals have risen from about 54.3% of free float of all mid cap and small cap companies, as of March 2020 to 60.6% as of March 2024. Several fund houses have proactively stopped lump sum investments in some small-cap schemes and also capped the amount that can be invested through <keyword id="20675888" type="General" weightage="20" keywordseo="systematic-investment-plan" source="keywords">Systematic Investment Plan</keyword> (SIP) into small-cap schemes. He also highlighted the potential mismatch between the demand for paper and the supply of fresh paper coming into the ecosystem. Gopalakrishnan said the industry can make more progress in streamlining operations and improving efficiency for investors. "At a time when instantaneous fund transfers have become ubiquitous in our country, perhaps we should look to improve our internal processes and the security settlement ecosystem, to ensure that funds are passed on to investors on the day of the settlement itself, rather than a day after or two days after," he added. Over the last few years, the mutual fund industry has made impressive strides, and is now playing a crucial role in channeling financial savings towards risk capital formation. This was driven by stable macros, increased formalization, robust corporate earnings, digitisation and user friendly access. Moreover, the number of mutual fund investors has grown significantly from about 2 crore as of March 2019 to nearly 4.7 crore as of June 2024, an impressive compounded annual growth rate of 18% during that period. Gopalakrishnan mentioned that several exciting initiatives are in the works, developed with input from all stakeholders. These include a proposed low-ticket SIP, further breaking down regular SIPs into smaller, more accessible units (sachetisation and tokenization), and the introduction of "mutual funds lite" regulations. These new regulations will simplify rules for passively managed funds, reducing the compliance burden and encouraging competition and innovation. Additionally, a new class of higher-risk schemes is proposed for investors with a greater capacity to handle risk.

SEBI asks mutual fund industry to proactively conduct stress test

Tensions in Middle-East are rapidly inching closer to their zenith, with Iran firing about 200 ballistic missiles at Israel late yesterday night. In response today, the Indian markets witnessed their worst decline in two months, with Sensex dipping around 1,769 points, or 2.1% to close at 82,497.10. <keyword id="19896381" type="General" weightage="20" keywordseo="Nifty" source="keywords">Nifty</keyword> followed suit and was also down by 2.1% to close the day at 25,250.10. As a result, about Rs 11 lakh crore were wiped off the market today. The decline was broad-based, with sectors like realty (dipped by over 4%) auto, and energy suffering the most. Broader indices also fell, losing nearly 2% each. The Hang Seng index, which had rallied over 14% during the last week, largely on the back of various stimulus measures announced by the central bank to stir consumption in the Chinese economy, also slumped around 1.47%. With the possibility of an all-out war between Iran and Israel looming on the horizon, threatening to happen sooner than later, markets are expected to remain volatile in near future. Even the India VIX, seen as a gauge of uncertainty and investor fear in the market, jumped over 9% during the day. The war could throw a huge spanner on India's crude oil import plans. As of August 2024, about 44.6% of India's crude oil imports came from <keyword id="19904316" type="General" weightage="20" keywordseo="middle-east" source="keywords">Middle East</keyword>. Israel has already promised significant retaliation, in response to Iran's attack in the days to come. And the strong possibility of a full-blown Israeli attack in Middle East, particularly major oil fields in Iran has sent the crude oil prices surging. Closer home, ONGC (Oil and Natural Gas Corporation) was amongst the biggest gainers on NSE today. <h2>Should Indian investors worry? </h2>But is the impending action in Middle-East the only reason behind today's drastic fall? Vishnu Kant Upadhyay, AVP, Research &amp; Advisory at Master Capital Services notes that while it plays a significant role, other factors are also at play. "Recent regulatory changes in the F&amp;O segment by SEBI is expected to impact trading volumes, as retail participation may decline due to the increased contract size and limits on weekly expiries. Meanwhile, strength in the Chinese market, following the People’s Bank of China (PBoC) stimulus package, has also diverted foreign investment to China, where valuations remain more attractive compared to India", he noted. But Upadhyay believes that the extension of losses in Indian markets wont last long. "From a technical perspective, as long as prices hold above the 25,250–25,100 zone, any decline could present an opportunity to build fresh long positions. A stock-specific approach is advisable, with sectors such as Oil, IT, PSU Banks, Metals, and Chemicals likely to outperform in the coming days", he adds. Shrikant Chouhan, Head Equity Research, Kotak Securities observes that as long as market is trading below 25,365/82,800, the weak sentiment is likely to continue. On the down side, it could slip till 25,150-25,025/82,200-82,000 as well. On the other side, one quick technical pullback is likely if the market succeeds to trade above 25,365/82,800. Above the same, it could bounce back till 25,475-25,500/83,100-83,300. The current market texture is volatile hence; level based trading would be the ideal strategy for the day traders. <h2><keyword id="20760178" type="General" weightage="20" keywordseo="mutual-fund-investors" source="keywords">Mutual fund investors</keyword>, stay put</h2>In the aftermath of a <keyword id="19968045" type="General" weightage="20" keywordseo="market-correction" source="keywords">market correction</keyword>, most mutual fund investors often face a critical decision- should they stop their SIPs (<keyword id="21047553" type="General" weightage="20" keywordseo="Systematic-Investment-Plans" source="keywords">Systematic Investment Plans</keyword>) or to view the downturn as a valuable opportunity to acquire more mutual fund units? By continuing SIPs during such downturns, investors can take advantage of 'rupee-cost averaging,' i.e. accumulating more units when prices are down. This approach not only lowers the average cost per unit, but also positions the portfolio for greater returns when the market eventually recovers, and softens the impact of short-term volatility. Swapnil Aggarwal, Director, VSRK Capital explains that alongside maintaining regular investments, revisiting your asset allocation is also essential in these turbulent times. A well-diversified portfolio, that balances equities with safer assets like bonds can withstand market fluctuations more effectively. You can consider shifting some investments into bond funds or other stable instruments, which can provide a cushion against further declines. <h2>What happens next? </h2>While the immediate impact of a market correction may lead to declines in the NAV (Net Asset Value) of mutual funds, disciplined investors can view this as a moment to reassess their strategies. Focusing on your <keyword id="20908416" type="General" weightage="20" keywordseo="long-term-financial-goals" source="keywords">long-term financial goals</keyword> will let you turn market volatility into opportunity! The market will remain keenly focused on the evolving situation in the Middle East. What will also be equally important are the US monthly jobs data due tomorrow, which could determine the size of Fed's next interest rate move in November.

Nifty, Sensex in freefall today as Iran mounts attack on Israel. Here's what experts think you should do

Capital markets regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords" meta.keywordsubtype="org" meta.entityname="Sebi" meta.hostid="261" meta.entityid="Sebi">Sebi</keyword> on Monday launched <keyword id="19925751" type="General" weightage="20" keywordseo="mobile-app" source="keywords">mobile app</keyword> '<keyword id="21922624" type="General" weightage="20" keywordseo="Saathi" source="keywords">Saa₹thi</keyword> 2.0' on <keyword id="20127396" type="General" weightage="20" keywordseo="personal-finance" source="keywords">personal finance</keyword> for <keyword id="19900618" type="General" weightage="20" keywordseo="investors" source="keywords">investors</keyword> with comprehensive tools aimed at simplifying complex <keyword id="21922626" type="General" weightage="20" keywordseo="financial-concepts" source="keywords">financial concepts</keyword>. "The updated 'Saa₹thi' app introduces a user-friendly interface with comprehensive tools aimed at simplifying complex financial concepts," Sebi said in a statement. The app includes <keyword id="21922625" type="General" weightage="20" keywordseo="financial-calculators" source="keywords">financial calculators</keyword> and has modules that introduce and explain KYC procedures, <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword>, <keyword id="20003842" type="General" weightage="20" keywordseo="ETFs" source="keywords">ETFs</keyword>, buying and selling shares on <keyword id="19905454" type="General" weightage="20" keywordseo="stock-exchanges" source="keywords">stock exchanges</keyword>, investor grievances redressal mechanism, and the Online Dispute Resolution (ODR) platform. Additionally, the app features a range of videos designed to assist investors in their personal finance planning. "In today's era, where social media sometimes provides biased or misleading information, there is a significant need for an unbiased, objective, and trusted source of investment information," Ananth Narayan G, Whole Time Member, said during the launch. "The Saa₹thi app serves this purpose by empowering investors with reliable and essential insights into the securities market. This tool can be especially useful for young investors who are at the beginning of their financial journey. "The content within the app is dynamic, allowing us to keep pace with the rapidly evolving market conditions. We actively seek public suggestions to further refine and enhance the Saa₹thi app, ensuring it continues to serve our investors," he said. The 'Saa₹thi' app is available for download on Google Play Store and the iOS AppStore.

Sebi launches Saa₹thi 2.0 mobile app on personal finance for investors

Mumbai, Markets regulator Sebi is building an artificial intelligence tool to help detect misselling by mutual funds, its <keyword id="15070191" type="General" weightage="50" keywordseo="chairperson-madhabi-puri-buch" source="Orion">Chairperson Madhabi Puri Buch</keyword> said on Tuesday. She cited a recent incident of a 90-year-old being sold a product with a seven-year lock-in period to illustrate an instance of misselling, and said algorithms will help flag such cases. "We are working on the question of misselling that may happen by a mutual fund distributor or an agent or by someone who is the responsibility of the mutual fund," Buch said while speaking at the fourth <keyword id="9621521" type="General" weightage="20" keywordseo="global-fintech-fest" source="Orion">Global Fintech Fest</keyword> here. She admitted that this is a very complex problem requiring intelligence, and added that the algorithm being built will have the essential tools to detect misselling like flagging the case of a 90-year-old being sold the product with a long lock-in period. At present, mutual funds submit essential data to Sebi periodically with respect to compliance with regulations. A "nil report" is considered the best, Buch said. At the same time, Buch said there may be misselling that may go unnoticed in the rule-based supervision and those same will be detected with the AI tool. "As we move to using AI to analyse the data, we hope that we will also find the ability to monitor these things (misselling) in the interest of the investors," she said. Meanwhile, Buch said the regulator is also keen to introduce fractional ownership of shares but the current legal set up does not allow it. "Somebody came with that (idea) and we thought it was good... we would have wanted to welcome them into the innovation sandbox but it is not permitted in the <keyword id="4625796" type="General" weightage="20" keywordseo="sebi-act" source="Orion">Sebi Act</keyword> itself. "It cannot be done until we change the Act -- not just the Sebi Act, but also the Companies Act," she said.

Sebi working on AI tool to curb misselling by mutual funds: Buch

Mutual funds stress test: What it means for you

New Delhi: Markets regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords">Sebi</keyword> has proposed allowing Real Estate Investment Trusts (<keyword id="20186402" type="General" weightage="20" keywordseo="REITs" source="keywords">REITs</keyword>), Small and Medium REITs (SM REITs) and Infrastructure Investment Trusts (<keyword id="20186403" type="General" weightage="20" keywordseo="InvITs" source="keywords">InvITs</keyword>) to use <keyword id="21737868" type="General" weightage="20" keywordseo="interest-rate-derivatives" source="keywords">interest rate derivatives</keyword> for <keyword id="23778373" type="General" weightage="20" keywordseo="hedging-risk" source="keywords">hedging risk</keyword>. Also, the regulator has suggested approving locked-in units for REITs and InvITs to be transferred among sponsors and their groups, similar to rules for promoters in listed companies, to help sponsors manage their holdings without compromising "skin in the game". Additionally, Sebi has suggested permitting fixed deposits to be considered as cash equivalents when calculating leverage for REITs and InvITs, clarifying credit rating requirements for REIT and InvIT borrowings, and setting a timeline for filling vacancies on their boards and expanding the asset base for REITs and SM REITs. The regulator has also proposed to permit REITs to invest in liquid mutual funds. It has suggested measures to facilitate ease of doing business for REITs and InvITs, along with investors' protection. According to its consultation paper, Sebi is considering allowing REITs and InvITs to hedge against interest rate fluctuations by using derivatives like interest rate swaps. This could help stabilise cash flows, reduce risks, and protect unitholder interests, especially for long-term infrastructure projects. It is also proposed to define "Common Infrastructure" for REIT regulations. To enhance business flexibility for REITs, it has been proposed to clarify that facilities like power plants, heating/cooling systems, water treatment, and waste treatment plants -- serving one or more REIT assets -- will qualify as "common infrastructure" under REIT rules. This applies even if these facilities are not located within a single project due to their technical requirements. These facilities should supply and be used exclusively by REIT assets. For power plants, however, any excess power can be sold to the state utility/grid as per regulations, with any credits or payments going towards the benefit of REIT assets. To improve transparency, it has been proposed to amend the governance norms for quarterly reporting of InvITs. Currently, quarterly results for the investment manager and its business segments are presented to the investment manager's board, but there is no direct requirement for InvITs to report their performance. The proposed amendment would clarify that quarterly results should specifically reflect the performance of the InvITs themselves, not just the investment managers. This change aligns InvIT regulations with REIT regulations, where the focus is on the quarterly results of the REIT itself. Also, it has been suggested to align the composition of NRCs in REIT and InvIT managers with listed companies under the LODR regulations. Currently, all NRC members for REITs and InvITs must be independent directors. The proposal allows a mix of independent and non-executive directors, similar to listed companies. To enhance investors' protection, Sebi has suggested reviewing conditions for InvITs to borrow beyond the 49 per cent limit, assessing REIT investments in unlisted equity shares and outlining the roles and responsibilities of trustees for REITs, InvITs, and SM REITs. In a separate consultation paper, the regulator has proposed a regulatory framework for "restricted return InvITs" to provide infrastructure investors with predictable returns by setting limits on both upside gains and downside protection. The proposed framework for restricted return InvITs is designed to provide investors with structured returns, capped at both minimum and maximum levels to offer stability. Restricted return InvITs would include downside protection -- a minimum assured return -- and/or an upside restriction, a cap on returns -- depending on the arrangement. These investments would be limited to sophisticated investors who meet high minimum investment thresholds, with each unit priced at a minimum of Rs 500 crore and total InvIT assets of at least Rs 50,000 crore. Investors would be required to sign a waiver and undertaking form, acknowledging their understanding of the structured returns and risks involved, including the transfer of any excess returns to the sponsors. This waiver should be submitted before purchase in both primary and secondary markets, with compliance overseen by merchant bankers or brokers. The Securities and Exchange Board of India (Sebi) has sought public comments on both consultation papers by November 13.

Sebi proposes to allow InvITs, REITs, SM REITs to use interest rate derivatives for hedging risk

<ul><li><keyword id="19914160" type="General" weightage="20" keywordseo="Groww" source="keywords" meta.keywordsubtype="org" meta.entityname="Groww" meta.hostid="261" meta.entityid="Groww">Groww</keyword> has received SEBI approval to launch the <keyword id="21425700" type="General" weightage="20" keywordseo="Nifty-Non-Cyclical-Consumer-Index-Fund" source="keywords">Nifty Non-Cyclical Consumer Index Fund</keyword>.</li><li>The Nifty Non-Cyclical Consumer <keyword id="21293774" type="General" weightage="20" keywordseo="index-fund" source="keywords">Index Fund</keyword> will be launched through an <keyword id="20498936" type="General" weightage="20" keywordseo="NFO" source="keywords">NFO</keyword>.</li><li>The Nifty Non-Cyclical Consumer Index Fund is expected to be launched in the first week of May.</li></ul>Financial services company Groww has received approval from the <keyword id="19970553" type="General" weightage="20" keywordseo="Securities-Exchange-Board-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Securities Exchange Board of India" meta.hostid="261" meta.entityid="Securities Exchange Board of India">Securities Exchange Board of India</keyword> (SEBI), the country’s securities market regulator to launch the Nifty Non-Cyclical Consumer Index Fund through a new fund offering (NFO). This will be the country’s first non-cyclical index fund and is expected to go live in the first week of May. The minimum investment amount for the NFO will be ₹500 and in multiples of ₹1 for purchases and ₹0.1 for switching. The redemption amount has been set at a minimum of ₹500 and in multiples of ₹1 thereafter. “The investment goal of the Nifty Non-Cyclical Consumer Index Fund is to generate long-term capital growth by investing in securities of the Nifty Non-Cyclical Consumer Index (TRI) in the same proportion/weightage to offer returns before expenses that track the total return of the Nifty Non-Cyclical Consumer Index, subject to tracking errors,” Groww said in a statement. Groww acquired the mutual fund business of Indiabulls Housing Finance last year for ₹175.6 crore. <cmsannotation type="cmsannotation" annotationid="What is a non-cyclical consumer index fund?" comment="subhead" text="What is a non-cyclical consumer index fund?">What is a non-cyclical consumer index fund?</cmsannotation> A non-cyclical consumer index fund focuses on companies that provide essential goods and services which tend to remain stable in demand regardless of the economic cycle. This type of fund is designed to protect against market volatility by investing in stocks from industries such as utilities, healthcare, consumer staples, and sometimes financials. In this instance, the fund is benchmarked against the Nifty Non-Cyclical Consumer Index (Total Return Index). This tracks the performance of the top 30 stocks under sectors such as consumer goods and services, telecom and more. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/jiocinema-introduces-new-ad-free-premium-plans-starting-at-29/articleshow/109581033.cms">An Ambani disruption in OTT: At just ₹1 per day, you can now enjoy ad-free content on JioCinema</a> <a href="https://www.businessinsider.in/tech/news/gigabyte-aorus-co49dq-49-inch-qd-oled-144hz-curved-gaming-monitor-launched-in-india/articleshow/109563798.cms">GIGABYTE AORUS CO49DQ 49-inch QD-OLED 144Hz curved gaming monitor launched in India</a> <a href="https://www.businessinsider.in/tech/news/apple-let-loose-event-scheduled-for-may-7-ipads-expected-to-be-launched/articleshow/109553148.cms">Apple Let Loose event scheduled for May 7 – New iPad models expected to be launched</a>

Groww receives SEBI approval to launch Nifty non-cyclical consumer index fund

<ul><li>The <keyword id="2831405" type="General" weightage="20" keywordseo="riskometer" source="Orion">riskometer</keyword> is calculated based on a number of factors, including the type of assets of the <keyword id="6354820" type="General" weightage="20" keywordseo="mutual-fund" source="Orion">mutual fund</keyword>, the fund's volatility, and the credit quality. </li><li>Equity funds, which invest in stocks, are generally considered to be more risky than debt funds, which invest in fixed income instruments. </li><li>When choosing a mutual fund, it is important to consider your own <keyword id="2067937" type="General" weightage="20" keywordseo="risk-tolerance" source="Orion">risk tolerance</keyword> and investment goals. </li></ul>Mutual funds carry varying levels of risk. These risks can be influenced by factors such as the types of investments held within the fund, prevailing market conditions, and the chosen strategy of the fund manager. It is crucial for investors to evaluate their risk tolerance and align it with the fund's risk level before investing. This helps ensure that the chosen mutual fund aligns with their financial goals and comfort level with potential fluctuations in returns. <cmsannotation type="cmsannotation" annotationid="Market regulator’s initiative" comment="Subhead" text="Market regulator’s initiative">Market regulator’s initiative</cmsannotation> The mutual fund riskometer is a representation of the risk associated with a mutual fund scheme. It was introduced by the Securities and Exchange Board of India (<keyword id="35210" type="General" weightage="20" keywordseo="sebi" source="Orion">SEBI</keyword>) in 2013 to help investors make informed investment decisions. In 2021, SEBI made some changes to the riskometer to improve its accuracy and transparency. The riskometer is based on a six-level scale, from low to very high, with each level represented by a different colour. <cmsannotation type="cmsannotation" annotationid="What the riskometer signifies" comment="Subhead" text="What the riskometer signifies">What the riskometer signifies</cmsannotation> The riskometer is calculated based on a number of factors, including the type of assets that the mutual fund invests in, the fund's volatility, and the fund's credit quality. “To assess the quality of a system, an average retail investor usually has little knowledge of risks because he is not familiar with them. Therefore, in order not to take unnecessary risks with his portfolio it is wise for them to examine the risk indicator,” says Mukesh Kochar, national head, Wealth, AUM Capital, a wealth management firm and mutual fund distributor. According to the riskometer, there are six levels of risk. <ul><li>Low </li><li>Moderately Low </li><li>Moderate </li><li>Moderately High </li><li>High </li><li>Very High </li></ul><cmsannotation type="cmsannotation" annotationid="How to use the riskometer" comment="Subhead" text="How to use the riskometer">How to use the riskometer</cmsannotation> When choosing a mutual fund, it is important to consider your own risk tolerance and investment goals. If you are a conservative investor, you may want to choose a fund with a low or low to moderate riskometer rating. If you are a more aggressive investor, you may want to choose a fund with a moderate to high or high riskometer rating. It is also important to remember that your risk tolerance may change over time. As you get older, you may become more conservative and want to reduce your risk exposure. Conversely, if you are young and have a long investment horizon, you may be more willing to take on risk. When investing in a mutual fund scheme, the investment horizon is very important. “Their investment horizon and the funds chosen for investments should be aligned. Short term investments should be allocated to low risk products, while long term investments may have a moderate or high risk rating,” says Kochar. Pankaj Kumar, Partner at Alpha Capital, a wealth management firm, agrees, “If your <keyword id="6133603" type="General" weightage="20" keywordseo="time-horizon" source="Orion">time horizon</keyword> is short, say one or two years, you should not go with a high amount of risk, because if a market turmoil happens you may end up losing money. But if you have a very long tenure then it makes sense to look into funds with higher risk.” says Kumar. <cmsannotation type="cmsannotation" annotationid="The riskometer is a starting point" comment="Subhead" text="The riskometer is a starting point">The riskometer is a starting point</cmsannotation> “ The riskometer is the same for almost all the equity funds. You cannot have large cap funds and small cap funds under the same category. There should be some amount of bifurcation among them,” says Kumar. The actual risk associated with a mutual fund can vary based on various factors, including the prevailing market conditions and the investment approach of the fund manager. Hence, it is essential for investors to thoroughly review the fund's prospectus before making an investment decision. “At this stage the riskometer is treating large cap or sector funds as equal at risk, which is not correct. So that's not the full proof, it's just a step in the right direction,” says Kochar. Once you have narrowed down your choices, take some time to research different mutual funds. Read the prospectus and compare the fees, performance, and risk rating of different funds. A financial advisor can help you assess your risk tolerance and choose the right mutual funds for your investment goals.

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