The Association of Mutual Funds in India said it did not not write to Sebi suggesting that any stock be capped on the index
Amfi said that the industry will continue to adhere to Sebi's guidance on the capping of a single stock
MUMBAI: Dismissing media reports as speculative, the Association of Mutual Funds in India, (Amfi) clarified on Thursday that it has not written to the markets regulator proposing the launch of new index. The industry body also did not suggest capping any stock in the index. In a statement, Amfi said that the industry will continue to adhere to Securities and Exchange Board of India (Sebi) guidance on the capping of a single stock.
“Referring to a speculative report in a section of the media about Amfi/AMCs proposing to Sebi to launch a new benchmark index, Amfi has clarified that it has not written to Sebi proposing the launch of new index nor capping any stock in the Index. Amfi requests media houses to not publish such unverified news as this can lead to unhealthy market speculation," it said in a press statement.
Amfi’s clarification comes in the wake of media reports which stated that the industry body had sent a petition to the markets regulator to create a new index as fund managers were not able to capture Reliance Industries Ltd's performance in their portfolio due to regulatory norms, which cap fund house’s exposure to a single stock at 10%.
However, Amfi said that whenever any mutual fund launches a scheme, the fund house chooses an appropriate benchmark index which reflects the composition of the scheme's portfolio. “Undoubtedly there are challenges in performance measurement as indices do not have a cap on stock whereas mutual fund schemes have a cap of 10% on a stock. However, this issue needs to be settled between fund houses and index calculating agencies. Globally, index calculating agencies do prepare customised indices which comply with investment restrictions of the fund," Amfi said in a statement.