Passive approach

Sebi's plans will offer more options to investors

In a recent circular, the Securities and Exchange Board of India (Sebi) issued an important update that is a potential game changer for passively managed funds. Equity-linked saving schemes (ELSS) can now offer passive options. This should lead to more efficient tax-saving options for retail investors. In addition, the regulator has outlined possible structures for passive debt funds and offered suggestions which would enhance the liquidity of exchange-traded funds (ETFs). Sebi suggests passive ELSS funds should track the 250 largest companies in terms of market capitalisation, and lays down limits for tracking error (average difference in daily returns) and tracking