Mumbai, Jan. 15 -- India's market regulator is closely scrutinizing new fund offers (NFOs) for portfolio overlap with existing schemes, even though its draft proposals on overlapping stocks in mutual fund schemes are yet to be notified.

In an 18 July consultation paper, the Securities and Exchange Board of India (Sebi) proposed that mutual funds ensure that no more than 50% of the stocks held in a sectoral or thematic scheme are the same as those held in other equity schemes, with the exception of large-cap schemes, in the same fund house.

"Now, whenever a mutual fund files for a thematic NFO, Sebi is asking for a model portfolio and the extent of overlap with the fund house's existing equity strategies," said a person aware of the matt...