The Insurance Regulatory and Development Authority (IRDA) will be allowing insurers to invest in Equity Exchange Traded Funds (ETFs).
The equity ETFs would be restricted to registered schemes of Mutual Funds (MFs) and over all expense ratio should be below 0.40 per cent of daily net assets, R K Nair, Member (Investment), IRDA said in circular issued on Thursday.
Equity ETFs should not be holding more than 15 per cent of Fund in a single company and total exposure to a particular sector should not exceed 30 per cent 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 comments, view of all stakeholders should be sent to the regulator within 30 days.