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72. '' Regulatory boards like SEBI and the RBI also impose some restriction on investment .''
Explain in this regard the Minimum Portfolio Diversification Norms on Equity .
Instead of keeping an eye on the events on the border, investors should focus on their future financial goals and look at investment in equities during market fluctuation as an opportunity to make investments at bargain prices.The cozy era of artificially -high assured returns is coming to an end. The market has been inexorably forcing down the risk-free rate. Regulatory boards like SEBI and the RBI also impose some restrictions on investment .Any Government that subsidizes investor this way i.e., by guaranteeing rate on RBI Bond or PPF higher than market returns on riskier securities is plain silly and is likely to go bankrupt pretty fast .Riskier equities give better returns than risk-free bonds in the long run.There are pitfalls that can distort investors' thinking and the choice they make.
Ans; The Minimum Portfolio Diversification Norms on Equity are: No Mutual Fund scheme shall invest more than 10% of its NAV in the equity shares or equity related instruments of any company , provided that the limit of 10% shall not be applicable for investments in Index Fund or sector or Industry specific scheme.Investment in Index Fund should be in accordance with the weight disclosed in the Offer Documents of respective Funds. In case of sector/Industry specific schemes the upper ceiling on investment may be in accordance with the weightage of the scrips in the representative sector/index as disclosed in the Offer Document or 10% of the NAV of the scheme whichever is higher . The basic objective is to ensure an adequate diversified portfolio , unless the specific objective of the scheme is to limit the investment . A Mutual Fund scheme shall not invest more than 5% of its NAV in equity shares or equity related investments in case of open-ended scheme and 10% of its NAV in case of close -ended scheme.