SEBI mandates 25% small cap, 25% mid cap, 25% large cap in multi-cap funds 😲

  1. Redemptions from large/mid caps concentrated funds
  2. Reallocation to small caps
  3. AMCs go for re-classification of their funds - no substantial change in allocation

What do you think?

I think we are going to see a bit of all of these. The challenge with re-classification is that most major AMCs already have funds in the other category and as per SEBIs rules one can have only fund per category. So AMCs will have to go for merging rather than re-classification.

Kotak AMC’s CIO suggested the following course of action in his update call post the SEBI circular -

  • Converting multicap scheme to other schemes
  • Returning of money to investors
  • Merging of schemes
  • Asking Sebi to create a new scheme names saying flexi cap

We already have a dynamic allocation category