'Sebi multicap fund rules will harm investors' interest,' says Dhirendra Kumar1 min read . Updated: 12 Sep 2020, 01:28 PM IST
'Apart from punters who have unwisely piled into small cap stocks and now need a rescue, no one else will benefit from this.'
Sebi in its latest circular on portfolio allocation of multi cap funds has made it mandatory for such schemes to invest at least a minimum of 25% in large cap, mid cap and small cap stocks. At present, there is no market cap restriction on multi cap funds. Dhirendra Kumar, CEO of Value Research calls it a 'Puzzling new regulation by Sebi.' He said in a tweet, "Hard to understand what benefit this will bring or what harm it will prevent for investors."
Dhirendra Kumar has questioned Sebi on twitter, the reason for this sudden decision of this micro-management. He tweeted, " Why is SEBI doing this? What benefit will this sudden micromanagement of investment strategies bring for investors?"
Kumar in his thread on twitter added, "Sudden decision by SEBI to start micromanaging funds' investments at such a delicate time could be counterproductive for investors. Apart from punters who have unwisely piled into smallcap stocks and now need a rescue, no one else will benefit from this. In fact, by forcing fund managers to compulsorily sell big quantities of large-cap stocks and buy small cap stocks, this will harm investors' interests."
Here are Dhrirendra Kumar's tweet thread:
Industry experts and fund managers believe this move will benefit small and mid cap space. Mid cap and small cap stocks will rally and investors of mid and small cap mutual funds who have been waiting for good returns since December 2017, will see the NAVs of their holdings going up in over an year, says Sunil Subramaniam, Managing Director, Sundaram Mutual Fund.
Abhimanyu Sofat, Head of Research at IIFL Securities gave a list of 11 mid cap stocks which are expected to rally due to buying by the AMCs.