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Active and Passive Equity Funds

Santhosh Kumar 15/11/2023

Active and Passive Equity Funds mind map
Context
Active equity funds
higher net inflows than passive
in Q2 FY24
Equity fund definition
mutual fund investing in stocks
high risk for long-term
substantial returns over time
categorized by company size
small-cap
mid-cap
large-cap
Mutual fund operation
collects money from investors
invests in securities
debt
equity
both debt and equity
Active Equity Funds
manager's role
active in stock selection
expense ratios
higher due to active management
portfolio management
driven by various strategies
trading frequency
higher
capital gains tax
higher if held under 1 year
returns
relatively higher
applicability
for alpha generation favouring investors
examples
ELSS Equity Linked Saving Scheme
Passive Equity Funds
manager's role
passive tracking of index
expense ratios
lower due to passive management
portfolio management
driven by benchmark index
trading frequency
lesser
capital gains tax
lesser if held under 1 year
returns
typically lesser
applicability
for market index allocation seekers
examples
Index mutual funds
Exchange-Traded Funds ETFs
Expense ratio explained
annual maintenance charge
finances fund expenses
operating costs
management fees
allocation charges
advertising costs
Capital gains taxes
owed on investment profits
if held for at least 1 year

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Last Natural Person Above Every Person Clause upsc notes Context SEBI faced challenges Hindenburg-Adani allegations case What Ultimate individual Control or ownership over Financial investment like FPI Transparency and accountability In the investment structure Most national and international laws Lack such provisions FPI Vs FDI FPI (Foreign Portfolio Investment) Investments by foreign individuals or entities In financial assets Stocks, bonds, mutual funds FDI (Foreign Direct Investment) Investments by foreign individuals or entities In tangible assets Businesses, properties, infrastructure projects Long-term commitment Significant level of control and ownership Challenges posed by FPIs Use of multiple platforms Below limit for beneficial owner identification Operation in tax haven jurisdictions Ambiguity around ownership and control SEBI's Proposed Disclosure Requirements for FPIs Tighter Rules for High-Risk FPIs 50% concentration in a single group or Assets valued above Rs 25,000 crore Additional details about Ownership, economic interests, control rights Transition Period and Adherence 50% exposure to a single corporate group Six-month transition period Additional disclosure requirements Detailed Ownership Information and Enhanced Transparency Comprehensive ownership information of FPIs Details about Natural persons, public retail funds, large public-listed companies Stricter FPI Disclosure Standards Stricter globally Greater transparency and accountability FPI Categorization Based on risk levels Low-risk: Government entities, central banks, sovereign wealth funds Moderate-risk: Pension funds, public retail funds High-risk: All other FPIs

Last Natural Person Above Every Person Clause

17/07/2023 / Financial/Security/Capital Market

Categories: Financial/Security/Capital Market

Tags: 15.11.2023, Newsbits

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