News: Indian realty fund rules ready

(TT 16/06/2006) Mumbai - Sebi is set to unfurl a package of goodies for mutual funds that would not only extend their bouquet of offerings but also expand the customer base.

Sebi chairman M. Damodaran today said the guidelines for real estate mutual funds would be promulgated next week, while details of the much-awaited capital protection scheme — a type of safety net for investors in mutual funds — would be announced soon.

The regulator is also drafting the norms for gold exchange traded funds (ETFs) and expects to announce them by next month.

“The guidelines for real estate funds will be out by next week and we are closer to the launch of capital protection schemes,” Damodaran said in his keynote address today at the Mutual Fund Summit 2006 organised by the Confederation of Indian Industry (CII).

Damodaran, however, did not elaborate on the capital protection scheme. Sources from the mutual fund industry said the scheme would not offer a guaranteed return but protect the capital of an investor. Damodaran said Sebi intended to enlarge the scope of investments by mutual funds abroad following announcements by finance minister P. Chidambaram in the budget.

In his budget speech, Chidambaram had said the ceiling on investments by mutual funds in overseas instruments would be raised to $2 billion from $1 billion and the requirement that investments be restricted to only those companies that hold at least 10 per cent in an listed Indian company removed.

He has also said a few chosen mutual funds would be allowed to invest cumulatively up to $1 billion in overseas exchange traded funds.