Changes in Multi-Cap Mutual Fund

   In a recent circular [1] on 11th September 2020 by Securities and Exchange Board of India (SEBI) have given regulation for changes in Multi-Cap Mutual Fund.

The SEBI has made such changes in order to diversify the funds invested by the investors in Large Cap, Mid Cap and Small Cap Companies. The following are the major points to be taken from this Circular –

1. Every Multi-Cap fund should have a minimum of 75% of its total assets either in Equity or Equity related Instruments.
2. Minimum 75% of its total assets in Equity or Equity related Instruments should be in following manner –
   • Minimum of 25% in Large Cap
   • Minimum of 25% in Mid Cap
   • Minimum of 25% in Small Cap
3. On the Basis of Market Capitalisation Stocks are categorised as follow –
   • Large Cap – Top 100 Stocks
   • Mid Cap – 101th to 250th Stocks
   • Small Cap – 251st and onwards
4. SEBI has given time to Mutual Fund Houses to comply witch such changes till 31st of January 2021 i.e. within one month of AMFI releasing the next list of Large Cap, Mid Cap and Small Cap Companies.

This will diversify the Portfolio of an Individual investor in all types of companies. Also, this will help Mid Cap companies and Small Cap companies as their Market Capitalisation will increase as most of the Multi Cap Funds are invested in Large Cap Companies.

 

 

-Akash Girish Doshi

 

Reference –

[1] h ttps://www.sebi.gov.in/legal/circulars/sep-2020/circular-on-asset-allocation-of-multi-cap- f unds_47542.html