No proposal to Sebi for new index, will follow cap on stock norms: Amfi

The Association of Mutual Funds in India (Amfi), an industry body, said on Thursday that it has not sent any proposal to the Securities and Exchange Board of India (Sebi) for launching a new benchmark index or placing a cap on any stock.

It added that the industry would continue adhering to Sebi’s guidance regarding capping of a single stock.

Referring to a report in a section of the media about Amfi/asset management companies (AMCs) proposing to Sebi the launch of a new benchmark index, the industry body in a statement clarified that it had not written to Sebi. Amfi said that whenever any mutual fund (MF) launches a scheme, the fund house chooses an appropriate benchmark index that reflects the composition of the scheme’s portfolio.  

It also said that there were, undoubtedly,  challenges in performance measurement given that indices do not have a cap on stocks, whereas MF schemes have a limitation of 10 per cent for a single stock. 

“However, this issue needs to be settled between fund houses and index-calculating agencies. Globally, index-calculating agencies do prepare customised indices that comply with investment restrictions of the fund,” it added.

All the 44 AMCs that are registered with Sebi, are the members of Amfi.