MF distributors call for halt on fresh purchases in multi-cap schemes

Switching from one scheme to another is treated as transfer and is subject to capital gains tax

Mutual fund (MF) distributors are dissuading investors from putting fresh money in multi-cap funds until fund houses clarify how they would navigate the recent regulatory diktat. 

Lump-sum investments and flows through systematic transfer plans (STPs) from debt funds to such schemes are being put on hold, said distributors. This could adversely impact flows into the schemes, which saw net outflows of over Rs 1,100 crore in August, and indirectly benefit other equity or debt categories as fresh allocations move there.

Investment through systematic investment plans (SIPs) of less than Rs 50,000, however, are being continued on hopes the issue will be resolved