Ch.6 · ARN and EUIN Rules · hard
What is 'AUM concentration' risk in mutual fund distribution and why does SEBI monitor it?
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EXPLANATION
AUM concentration risk occurs when a single investor (25% limit per investor per scheme) or distributor controls a very large share of a scheme's AUM. If such an investor/distributor causes large sudden redemptions, it can destabilise the scheme. SEBI's 25% investor limit and monitoring of distributor concentration are safeguards against this risk.
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