The Securities and Exchange Board of
India (SEBI) has made some changes in the asset allocation rules for multi-cap
mutual funds. According to the new rules, such funds will be required to invest
at least 75 per cent of their funds in shares. This limit is currently 65 per
cent. In addition, such funds would have to invest at least 25 per cent each in
the shares and related securities of companies with large, medium and small
market capitalization, the SEBI circular states.
Mutual fund industry experts say the
move will divert Rs 30,000 to 40,000 crore from stocks of companies with large
market capital to midcap and smallcap companies. The regulator stated that all
multi-cap funds will complete compliance with these provisions within one month
from the date of publication of the next list of shares by the Association of
Mutual Funds in India (AMFI). The date is January 2021.
SEBI said that the multi-cap fund
scheme has been amended with a view to diversify the investment of multi-cap
funds into large, mid and smallcap companies. Currently, multi-cap funds have to
invest 65 per cent of their total assets in shares and related securities.
Apart from this, there is no restriction on investing in large, mid or smallcap
of these funds. Experts say that because of this, such multi-cap funds make a high
allocation in large-cap. The remaining investment is done in medium and
small-scale market capitalization stocks.
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