6 hrs ago
Mutual Funds’ IPO Bets Spur Calls for Investor Safeguards
Many companies have been selling shares to the public at very high prices.
Mutual funds have been buying a large share of these new offerings.
New shares can be riskier because there is less history to judge the company.
Prices can also be pushed up soon after a company lists, allowing some investors to sell quickly.
The editorial says mutual funds may be buying IPOs partly because they need to invest large inflows from savers.
A SEBI survey found that mutual funds had sold 38% of their anchor allocations within one year.
The editorial wants stronger rules to protect people who invest through mutual funds.
It suggests special funds for IPOs and limiting regular schemes to investing less than 5% of their portfolios in new offerings.
Mutual funds accounted for about one-third of mainboard IPO sizes in 2024 and 2025.
Their share was 26.6% of IPOs opened between January and August 2026.
Mutual fund primary-market investments rose from ₹6,684 crore in 2020 to ₹57,668 crore in 2025.
The article says IPOs carry greater information and manipulation risks than listed stocks.
It urges SEBI to consider dedicated primary-market funds and a 5% limit for regular schemes.
- Who
- Mutual funds, IPO investors, company promoters, fund managers, and SEBI are central to the discussion.
- What
- The editorial examines mutual funds' growing participation in initial public offerings and calls for tighter safeguards.
- Where
- The activity concerns the primary market for equities and mainboard IPOs.
- When
- The trend covers 2020 through August 2026; the editorial was published on September 11, 2026.
- Why
- The editorial argues that IPOs have limited company information, possible post-listing price manipulation, and risks from short-term investing.
Expanded IPO Participation
Stronger Investor Safeguards
Role of mutual funds in IPOs
Expanded IPO Participation
Existing SEBI rules allow mutual funds to participate through qualified institutional buyer and anchor-investor categories, helping them deploy growing inflows.
Stronger Investor Safeguards
The editorial argues that pressure to deploy inflows may encourage funds to enter IPOs without sufficient due diligence.
Investment approach
Expanded IPO Participation
Anchor allocations provide mutual funds with confirmed access to IPO shares before public subscription opens.
Stronger Investor Safeguards
The early exit of 38% of anchor allocations within a year suggests that some fund managers may be treating IPOs as short-term opportunities.
Regulatory response
Expanded IPO Participation
Current rules broadly support mutual fund participation in the primary market.
Stronger Investor Safeguards
The editorial calls for special primary-market funds and a below-5% limit for IPO holdings in regular equity and hybrid schemes.
Key facts
- Mutual fund IPO share
- About one-third of aggregate mainboard IPO size in 2024 and 2025.
- 2026 IPO share
- 26.6% of IPOs opened between January and August 2026.
- IPO participation
- Mutual funds invested in over 90% of IPOs between 2020 and 2022 and around 78% over the last four years.
- Investment growth
- Primary-market mutual fund investments increased from ₹6,684 crore in 2020 to ₹57,668 crore in 2025.
- Anchor exits
- A SEBI survey found that mutual funds had exited 38% of anchor allotments within one year.
- Proposed portfolio limit
- The editorial recommends limiting regular equity or hybrid schemes' IPO investments to below 5% of portfolio value.
Sources
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