Last week, Sebi published a circular with a range of changes in the rules governing the operation of mutual funds. Even though there were as many as six different changes that were made, there isn't anything much that would directly impact mutual fund investors. From an investor's perspective, the most interesting were the changes regarding New Fund Offers.

Unlike stock IPOs, mutual fund offers stay open for a long period, sometimes 30 or even 45 days. Sebi has now asked that this be shortened to 15 days. The reasoning behind this is that over a long period during which the issue is open, investors who apply early in the period find their money locked in unproductively. In the same spirit, Sebi has extended the ASBA (Applications Supported by Blocked Amount) system to mutual fund NFOs. In ASBA, investors apply for IPOs while the application amount stays in their own account and is just blocked from other use. The issuer is able to withdraw the amount when it allots the shares.

This scheme is a Close Ended Income scheme. The new fund offer starts from 23rd March 2010 to 25th March 2010.