IRDA may allow insurers to invest in equity ETFs

India Infoline News Service | Mumbai |

Equity ETFs should not be holding more than 15% of Fund in a single company and total exposure to a particular sector should not exceed 30% of the fund

The Insurance Regulatory and Development Authority (IRDA) on Wednesday released a draft on allowing insurers to invest in Equity Exchange Traded Fund (ETF). The regulator has proposed that Equity ETFs would be restricted to schemes of Mutual Funds.

The IRDA will allow insurance companies to invest in equity ETFs.

The equity ETFs would be restricted to registered schemes of Mutual Funds (MFs) and over all expense ratio should be below 0.4% of daily net assets, RK Nair, Member (Investment), IRDA said in circular issued on Thursday.

Equity ETFs should not be holding more than 15% of Fund in a single company and total exposure to a particular sector should not exceed 30% of the fund. No investments in the overseas equity ETFs.

The draft guidelines were issued in view of the representations from the industry to allow insurance companies to invest in equity ETFs.

Equity ETFs are funds whose unit price is derived from basket of underlying equity shares. These banks of securities differ depending upon the nature of ETF.

The IRDA has invited comments of all stakeholders within 30 days.

The regulator has also said that the Equity ETF should be listed on atleast two Exchanges having nationwide terminals and not have any overseas investments.
 

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