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Tuesday, December 01, 2020

New option for fund houses: Sebi creates flexi cap MF category

The new flexi cap category, introduced by the markets regulator, will allow fund houses to shuffle their allocations freely across small, mid and large cap stocks without any minimum limits.

By: ENS Economic Bureau | Mumbai | November 7, 2020 1:36:38 am
average assets under management, AUM, mutual funds rose in Mumbai, AUm all time high in mumbai, Business News, Indi, Indian ExpressEarlier, there was no such minimum investment guideline (into category of stocks) for multi cap funds. (Representational Image)

The Securities and Exchange Board of India (Sebi) on Friday introduced flexi cap, a new category of mutual funds, in which fund houses will be allowed to shuffle their allocations freely across small, mid and large cap stocks without any minimum limits.

In a circular issued in September, the markets regulator had specified that the minimum investment in equity and equity-related instruments of large, mid and small cap companies in multi cap schemes should be 25 per cent each of total assets under management of the scheme.

Earlier, there was no such minimum investment guideline (into category of stocks) for multi cap funds. While Sebi norms said multi caps should invest at least 65 per cent into equity and equity-related instruments, fund managers were free to allocate the money in large, mid or small caps.

“We heartily welcome the Sebi circular on flexi cap category. Continuing its investor empowerment through ‘true to label’ philosophy, the Sebi had proposed minimum allocation to large cap mid cap and small cap stocks in multi cap category. Keeping in mind the potential disruption in existing multi cap equity funds, the Sebi has created flexi cap category which provides flexibility of allocation to any capitalisation,” said Nilesh Shah, MD, Kotak Mutual Fund.

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