2 min read.Updated: 16 Sep 2020, 08:04 AM ISTAvneet Kaur
Sebi's new portfolio allocation rules for multi cap funds require them to invest a minimum of 25% of their assets each in large cap, mid cap and small cap stocks
Most multicap funds at present are skewed towards large cap stocks
SEBI has created a buzz by changing portfolio allocation rules for multi cap mutual funds. Multi cap funds which at present can invest across market cap at the discretion of the fund manager will not be allowed to do that after January end next year. The new rules require them to invest a minimum of 25% of their assets each in large cap, mid cap and small cap stocks. Consequently, the need would arise for a major shift by various mutual fund schemes in their allocation to mid- and small-caps. The two largest funds in the category - Kotak Standard Multicap Fund and HDFC Equity Fund would need a major shift to mid caps and small cap stocks if thy do not opt for reclassification of the schemes to some other category or merger, shows a report by Anand Rathi.
Kotak Standard Multicap Fund the biggest multi cap fund manages an AUM of ₹29,714 crore, HDFC Equity Fund, the second largest fund manages assets worth ₹19,798 crore.