In addition, the new rule will create regulatory arbitrage in favour of index funds and exchange-traded funds (ETFs) and will result in potential death of active fund management, fund houses said. The rule, aimed at aligning the interest of the key employees of AMCs with the unitholders of the mutual fund schemes, will come into effect from June 1. Index funds, ETFs, overnight funds and close-ended funds have been exempted from the new rule. "This will also create regulatory arbitrage in favour of index funds and exchange-traded funds (ETFs) and will result in potential death of active fund management," Patel added. "This will further increase the trust of mutual funds investors in mutual funds, he added.

Source: Mint April 30, 2021 12:11 UTC