According to an analysis done by Edelweiss Professional Investor Research, large-cap stocks are expected to see an outflow of close to Rs 36,000 crore if fund houses comply to the new norms for multi-cap funds.
New Delhi: The Securities and Exchange Board of India (Sebi) on Friday issued a new directive for multi-cap mutual fund schemes to allocate minimum 25% of their portfolio to each of the three categories: Large-cap, mid-cap and small-cap companies. Analysts say fund managers of large multi-cap schemes will find it difficult to comply to the latest Sebi directive as there are not enough stocks in the smallcap space where they can invest 25% of the scheme’s AUM. Here is what investors in a multi-cap scheme can expect.
1) Industry experts advise retail investors not to go for any redemption in haste and wait for fund houses to take action as the extend of changes may not be as drastic as is being considered. “We will look at investor interest first. If nothing changes, we believe there are options available to run the same strategy,” the Economic Times quoted Neil Parikh, CEO, PPFAS Mutual Fund as saying.
Also Read: NGO launches ‘Kama Aaya’ App launch, will help skilled, unskilled and workers get employment
2) Industry experts say fund houses are looking for ways to protect investor’s interest. Large funds could recategorise their funds in such a way that they complay with Sebi guidelines and investors do not have to act. The ET report mentioned that fund houses are also in talks with the regulator to create a new fund category call flexicap, which can house their existing multi-cap schemes.
3) According to GEPL Capital data, most of the multicap funds have more than 70% allocation to largecaps, 5-13% exposure to mid-cap stocks and 4-19% to smallcaps. So there is a possibility that fund houses may merge their multi-cap schemes with their existing large-cap or large-and-mid-cap schemes.
According to an analysis done by Edelweiss Professional Investor Research, large-cap stocks are expected to see an outflow of close to Rs 36,000 crore if fund houses comply to the new norms for multi-cap funds.
