Nilesh Shah recommends new category to Sebi amid tweaks in multi cap fund rules2 min read . Updated: 18 Sep 2020, 02:15 PM IST
'We will not buy small and mid cap stocks if it doesn't make sense for our unitholders contrary to what is being speculated on street,' says Nilesh Shah, MD, Kotak Mutual Fund
Nilesh Shah, Chairman Amfi and Managing Director, Kotak Mahindra Mutual Fund, has requested Sebi to form a new category, called 'flexi cap' to avoid huge disturbance in the existing multi cap funds amid new portfolio allocation rules. Nilesh Shah discussed the option with distributor partners afew days ago where he said, "We will request them (Sebi) to consider creating a Flexi Cap category within or outside multicap category to ensure that minimum portfolio disturbance happens while complying with the True to Label for Multicap Funds."
The AMC has already sent the recommendation to Amfi. In response to a query by Mint Digital, the AMC said, "We have forwarded this suggestion to AMFI. AMFI will explore various options including one suggested by us with Industry participants before sharing the suggestions with SEBI."
Nilesh Shah-led Kotak Mutual Fund manages Kotak Standard Multicap Fund, the largest scheme in the multi cap category holding assets worth ₹29,700 crore. Nilesh Shah also ensured that the AMC will not buy small and mid cap stocks if it doesn't make sense for the unit holders, contrary to what is being speculated on street.
Kotak Standard Multicap Fund has a large-cap bias with around 70% of its portfolio invested in the top 100 stocks by market capitalisation.
Kotak Mutual Fund does not foresee material change in their investment process due to SEBI circular on multi cap fund asset allocation, ensured Shah to the investors.
Nilesh Shah discussed several options available for the scheme with the distributor partners. He said, an option will be chosen based on the due process of law and appropriate approval of unitholders, trustees and regulators.
"We will consider various options to ensure full compliance of SEBI regulations and managing/protecting our unitholders interest. Some of the options under consideration include:
- returning money to clients
- requesting for a switch to our other equity funds with the help of our partners
- merging multi cap fund with large cap or large and mid cap fund to maintain investment process and portfolio quality
- converting multi cap fund to thematic fund like ESG fund to maintain investment process as well as portfolio quality," said Nilesh Shah i his interaction with distributors.
Shah said, "just like in balanced funds, it is possible to manage conservative or aggressive hybrid funds, same way in multi cap category it is possible to manage multi cap ( with minimum allocation as per new circular to large cap , midcap and small cap stocks ) and 'Flexi Multicap' ( with flexible allocation to large cap mid cap and small cap stocks )."