Time to Increase Allocation to Equity MF

The mutual fund industry in India is once again in the limelight as the Securities Exchange Board of India (SEBI) has issued a fresh circular with the aim of developing passive funds. In a fresh initiative, SEBI has allowed fund houses to launch three new categories of Debt Funds viz. ETFs or index funds focusing on corporate bond markets, government securities markets and a combination of both i.e. corporate bonds and government securities. What is interesting is that SEBI has given an option to ETFs and index funds to replicate the underlying index. This step can increase liquidity in the fixed income markets.