Archive · 15 Jan 2026
Sebi Scrutinizes Mutual Fund Portfolio Overlaps
The Securities and Exchange Board of India (Sebi) is closely checking new mutual fund schemes to make sure they don't have too many of the same stocks as existing ones.
They proposed that no more than 50% of the stocks in a sectoral or thematic scheme should be the same as those in other equity schemes from the same fund house.
This is to help investors by making sure the funds are different enough.
Sebi is asking fund houses to explain why they are launching new funds if they overlap too much with existing ones.
They are also proposing rules for value and contra funds to ensure they don't overlap too much.
If they do, the fund houses will have to rebalance their portfolios or give investors an exit option.
Sebi is scrutinizing new fund offers (NFOs) for portfolio overlap with existing schemes.
Proposed limit of 50% overlap for sectoral or thematic schemes, except for large-cap schemes.
Sebi asks for rationale behind launching new funds with high overlap with existing schemes.
37 sectoral and thematic fund NFOs launched in the past year, compared to 19 across the entire equity category.
Proposed rules for value and contra funds to ensure overlap does not exceed 50%, with rebalancing required if it does.
- Who
- Securities and Exchange Board of India (Sebi)
- What
- Scrutinizing new fund offers (NFOs) for portfolio overlap with existing schemes
- When
- Ongoing, with a consultation paper issued on 18 July
- Where
- India
- Why
- To prevent schemes from holding similar stocks and to expand opportunities for mutual funds
- Regulator
- Securities and Exchange Board of India (Sebi)
- Proposed Overlap Limit
- 50% for sectoral or thematic schemes
- Exception
- Large-cap schemes
- Sectoral/Thematic NFOs in Past Year
- 37
- Total Equity NFOs in Past Year
- 19
- Overlap Monitoring Frequency
- Semi-annually for value and contra funds
- Rebalancing Period
- 30 business days (extendable by another 30 days)