You are here: Home » Markets » News
Business Standard

Sebi issues clarification on asset allocation framework for multi-cap MFs

In its latest press release, Sebi noted that some sections of media have reported various views on the circular and various conclusions are being drawn

Topics
Mutual Funds | Sebi | Multi cap funds

Press Trust of India  |  New Delhi 

sebi
It is reiterated that to achieve the desired objective of True to Label and Appropriate Benchmarking, Sebi will examine proposals of the industry received in this regard, it read.

Regulator on Sunday said that have many options to meet with the requirements of its circular pertaining to asset allocation framework for multi cap schemes based on the preference of their unit holders.

In a press release, the watchdog clarified that apart from rebalancing their portfolio in the Multi Cap schemes, (MF) could inter-alia facilitate switch to other schemes by unit holders, merge their Multi Cap scheme with Large Cap scheme or convert their Multi Cap scheme to another scheme category, for instance, Large cum Mid Cap scheme.

The clarification came after the regulator tweaked asset allocation framework for multi cap through a circular issued on Friday, requiring them to invest a minimum of 25 per cent each in Large, Mid and Small Cap stocks, and giving flexibility to the fund manager with the balance 25 per cent.

In its latest press release, noted that some sections of media have reported various views on the circular and various conclusions are being drawn.

"is conscious of market stability and therefore has given time to the Mutual Funds till January 31, 2021 to achieve compliance with the circular through its preferred route of which rebalancing of the portfolio is only one such route," the regulator said.

It is reiterated that to achieve the desired objective of True to Label and Appropriate Benchmarking, Sebi will examine proposals of the industry received in this regard, it added.

Multi Cap schemes had flexibility in terms of allocation to Large, Mid and Small Cap stocks but it was observed that some Multi Cap Schemes have skewed portfolios, with over 80 per cent of investment in large cap stocks akin to Large Cap schemes, and some Multi Cap schemes have near zero or insignificant asset allocation to small cap companies.

Therefore, in order to achieve the objectives of True to Label and Appropriate Benchmark, a need was felt to review the scheme characteristics of Multi Cap schemes and take necessary steps to clearly distinguish Multi Cap schemes from other category of schemes, Sebi noted.

"In order to diversify the underlying investments of multicap funds across the large, mid and smallcap companies and be true to label, it has been decided to partially modify the scheme characteristics of multicap fund," the Securities and Exchange Board of India (Sebi) had said in its circular on Friday.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sun, September 13 2020. 20:49 IST
RECOMMENDED FOR YOU
.