Committed to follow Sebi's new norms on multi-cap MF schemes: Amfi

Industry body Amfi has said it is committed to follow market regulator Securities and Exchange Board of India's (Sebi) new regulation on multi-cap mutual fund schemes.

"Given the flexibility now offered by Sebi to facilitate switch to other schemes or merger of schemes, the appropriate portfolio changes will accordingly happen in an orderly fashion," the industry body said in a statement issued on late Sunday.

The Association of Mutual Funds in India (Amfi) has welcomed Sebi's clarification on multi-cap schemes, which is important for the orderly functioning of the market, as street had started anticipating huge flows in small and mid-cap stocks over next couple of months from the multi-cap schemes.

The industry body said it is grateful to the market watchdog for its open door policy for a dialogue and will gather feedback from members and revert for non-disruptive execution of multi-cap funds portfolio balancing.

On Sunday, Sebi said that mutual funds have many options to meet with the requirements pertaining to new asset allocation framework for multi-cap schemes.

Sebi clarified that apart from rebalancing their portfolio in the multi-cap schemes, mutual funds could facilitate switch to other schemes by unit holders, merge their multi-cap schemes with large-cap schemes or convert their multi-cap schemes to another scheme category, for instance, large cum mid-cap schemes.

The clarification came after the regulator on Friday, directed multi-cap funds to invest at least 25 per cent of their corpuses each in large-cap stocks, mid-caps and small-cap stocks.

This resulted in concerns among the mutual fund industry and fund managers estimated the move would result into see Rs 30,000-40,000 crore moving out of large-cap to mid-cap and small-cap companies.

At present, majority of the multi-cap funds have run with a large-cap bias and the new requirements.