The Securities and Exchange Board of India on 30th March 2022 has notified the timeline for Rebalancing of Portfolios of Mutual Fund Schemes in order to bring uniformity. The rebalancing period would be applicable in the event of deviation from the mandated asset allocation as mentioned in the Scheme Information Document (SID) due to passive breaches.
The mandatory rebalancing period for all mutual fund schemes except index funds and exchange-traded funds (ETFs) is 30 business days and if the portfolio of schemes is not rebalanced within the mandated time frame, justification in writing, including the details of the efforts made to rebalance the portfolio, should be placed before an investment committee.
The Investment Committee may, if it so desires, extend the time limit by sixty (60) business days from the date of completion of the mandatory rebalancing period.
In case the portfolio of schemes is not rebalanced within the mandated and extended time-frame, the AMC will not be permitted to launch any new scheme until the portfolio is rebalanced. They will not be allowed to levy exit load, if any, on investors exiting such schemes.
