Asset managers chafe as Indian regulator cracks down on new funds

When Franklin Templeton’s India unit wanted to launch a mutual fund that would switch allocation among stocks, bonds, gold and money markets, the Indian regulator baulked, deeming it too risky for domestic investors, according to the company. The Securities and Exchange Board of India, or SEBI, is wielding an unprecedented level of control over how mutual funds operate, delaying new launches and dictating investment strategy, frustrated insiders in the embattled industry say. SEBI’s tighter scrutiny adds to the challenges for the two-decade old Indian mutual fund industry that has endured a steady stream of redemptions from equity funds in recent years. Even as Indian stocks hit record highs, most of India’s 47 asset management firms are unprofitable and have underperformed the broader index so far this year.


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