AMCs outline riders to exit small, midcap MFs in case of market crisis

Redemption gating, cap on employee withdrawal among measures

Small and midcap schemes may impose restrictions on redemptions, cap employee withdrawals, and increase the exit load, while ensuring a proportionate liquidation of the portfolio during market crises to safeguard the interests of all investors. These measures have been outlined in the investor protection policies recently put out by mutual fund (MF) trustees.

The policies for small and midcap schemes were prepared by MF trustees following directives from the Securities and Exchange Board of India (Sebi) earlier this month. Amid concerns of excessive froth, the regulator called for additional measures to protect investors in small and midcap schemes.

The policies