Sebi trying to curbing portfolio overlap: What does it imply for MF investors?

Portfolio overlap negates the benefit of diversification. If multiple mutual funds invest in the same stocks, for the investor it might mean being exposed to the same risks through more than one fund. To eliminate the risk of this unintended concentration Sebi has directed AMCs to publish overlap data n their website so that investors can have a look and decide.

Kolkata: Capital markets regulator Sebi (Securities and Exchange Board of India) is concerned with the overlap in mutual funds which occurs when multiple funds in the same portfolio ends up holding the same stocks or sectors. The outcome: unintended concentration rather than diversification. if it happens, it might so happen that if one fund in an individual’s portfolio underperforms, other funds might too. Thus what might look like a diversified portfolio can actually be concentrated.

Last week Sebi introduced various measures to protect the interests of mutual fund investors. One of it consists in asset management companies disclosing on their........

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