Some of the mutual fund houses are merging schemes and restricting inflows into small- and mid-cap funds even as they prepare to meet the new SEBI regulation on classification of schemes by end of this month.
In October, the regulator issued a circular directing the MFs to group their equity schemes under large-, mid- and small-caps based on market capitalisation of the stocks the scheme has invested.
For instance, an equity large-cap fund will consist of at least 80 per cent large-cap stocks defined as the top 100 companies in terms of market capitalisation. Similarly, mid-cap fund will have at least 65 per cent investment in mid-cap stocks that are ranked between 100 and 250 in market-cap, while small-caps would cover all other companies.