Sebi's Regulatory Updates Promote Innovation in Passive Funds and Expand AIF Access

The Securities and Exchange Board of India (Sebi) has introduced regulatory changes aimed at enhancing innovation and flexibility in India's investment landscape. New rules on mutual fund categorization limit portfolio overlap, encouraging asset management companies to develop diverse passive funds, potentially benefiting investors with more cost-effective options. Concurrently, reforms in the Alternative Investment Fund (AIF) framework expand access for accredited investors through co-investment vehicles and relaxed norms, while raising considerations about liquidity and risk management in private market investments.