Topic 6: MUTUAL FUND: IN PROGRESS

n July 2025, the Indian mutual fund industry witnessed several significant developments, both regulatory and market-driven. On July 18, the Securities and Exchange Board of India (SEBI) released a set of proposed changes aimed at reshaping mutual fund offerings. A key recommendation was to allow asset management companies (AMCs) to operate both value and contra funds, as long as their portfolio overlap does not exceed 50%. This marked a departure from the earlier rule that restricted AMCs to offering only one of the two. SEBI also opened discussions on whether equity mutual funds should be permitted to diversify their uninvested assets into instruments like debt, gold, silver, and real estate investment trusts (REITs). The regulator has invited public feedback on these proposals until August 8, 2025. In terms of market performance, July saw international mutual funds outperforming their domestic counterparts by a significant margin, with some global funds delivering returns of up to 10%. Sectors such as pharmaceuticals and healthcare were especially strong, reflecting global investor interest in these areas. This trend highlighted a growing appetite for international diversification among Indian investors. Despite this outperformance, the broader domestic equity market faced headwinds. Foreign Portfolio Investors (FPIs) were net sellers throughout July, particularly in equities, amid growing trade tensions and tariff uncertainties between India and the United States. This negatively impacted market sentiment, leading to a decline of 3–4% in major indices. A notable trend was the increasing penetration of mutual funds into smaller, non-metro (B-30) cities. This was driven by digital initiatives, enhanced investor education, and more accessible investment thresholds. Overall, July 2025 represented a phase of structural change and expansion in the Indian mutual fund industry. From SEBI’s progressive proposals to shifts in investor behaviour and global fund outperformance, the month underscored a broadening and deepening of the market



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