Q. With reference to Mutual Funds in India, consider the following statements:
1.Exchange-Traded Funds (ETFs) are always traded at a significant discount to their Net Asset Value (NAV).
2.Mutual Funds are regulated by both RBI and SEBI, but are compulsorily registered with SEBI.
3.In a balanced mutual fund scheme, the proportion of investments in loan and share markets may be adjusted depending on market conditions.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- ETFs are traded close to their NAV, not necessarily at a significant discount. In fact, compared to close-ended funds (which often trade at a discount), ETFs are designed to mirror NAV more closely.
- Mutual Funds were first introduced in the money market (under RBI), but they operate in both money and capital markets. Thus, they have dual regulation, but they are compulsorily registered with SEBI, which acts as the primary regulator for investor protection.
- Balanced schemes typically invest around 60% in the loan market and 40% in the share market, but this ratio can be adjusted based on the market situation, as disclosed by the fund.
Source: Indian Economy (Dr. Ramesh Singh)
