SEBI has clarified that mutual funds have multiple options to comply with the new rules on exposure to large cap, mid cap and small cap stocks in multi cap funds introduced on Friday.
"Apart from rebalancing their portfolio in the multi cap schemes, they could inter-alia facilitate switch to other schemes by unitholders, merge their multi cap scheme with their large cap scheme or convert their multi cap scheme to another scheme category, for instance large and mid cap scheme," the market regulator said in a press release released on Sunday.
On September 11, the market regulator had asked fund houses to invest at least 75% of the total corpus across market capitalization with at least 25% exposure each to large cap, mid cap and small cap stocks.
SEBI said that multi cap schemes had flexibility in terms of allocation to large, mid and small cap stocks. "However, it has recently been observed that some multi cap schemes have skewed portfolios, with over 80% 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.”
“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 said in the press release.
SEBI added that it will examine all the proposals by the industry on ensuring compliance with true to label and appropriate benchmarking.
