In November 2020, the Securities and Exchange Board of India (Sebi) approved the launch of flexicap category of mutual funds, where at least 65 per cent of the corpus will be invested in equities. The name of the funds is derived from their flexibility to allocate across large-cap, mid-cap and small-cap stocks.
The market regulator had earlier introduced guidelines for asset allocation for multi-cap funds, mandating a minimum of 25 per cent of the corpus each in the three category of stocks. This was done to make the multi-cap funds true to their label and to circumvent the bias of some multi-cap funds that had a large-cap tilt. Following the flexicap announcement, most of the multi-cap funds that had large-cap-biased portfolio were reclassified as a flexicap funds.
