Sebi may allow AMCs to handle family office funds

Mumbai: Sebi on Monday proposed to allow asset management companies (AMCs) to offer services to pooled non-broad based funds such as family offices. At present, Sebi rules bar AMCs from providing management and advisory services to non- broad based funds, unless they mandatorily obtain a portfolio management services(PMS) licence to do the same.

AMCs are currently permitted to provide management and advisory services to pooled assets which are broad based in nature.

These restrictions were imposed by Sebi in 2011 to prevent conflict of interest which may arise due to differential fee structure for mutual fund as a product vis-a-vis other products.


The regulator proposed that AMCs would be required to ensure that the resources dedicated to pooled non-broad based funds should be proportionate to the fee earned by AMC from such funds compared to fees from investors in mutual fund schemes and that mutual fund investors are not made to bear the cost of servicing mandates for pooled non-broad based funds.

“While there is potential conflict of interest if an AMC charges a higher fee from pooled nonbroad based client for providing preferential services (as this may incentivise the AMC to divert resources away from broad based funds), offering discounted fees to pooled nonbroad based clients by cross subsidisng the cost through mutual fund schemes also results in mutual fund investors bearing a disproportionate share of expenses,” Sebi said in a discussion paper.