Sebi changed the portfolio allocation rules for multi-cap equity mutual fund schemes on Friday. Under the new rules, multi-cap mutual funds must invest at least 75% in stocks. Currently, the minimum capital allocation must be 65%. Also, in the future, these schemes will have to invest at least 25% each in large-cap, mid-cap, and small-cap stocks. Currently there is no such allocation restriction and fund managers can invest in market capitalization of their own choosing. Mutual funds have been told to comply with the new rules by the end of January of next year. While all of these changes occur in multi-cap funds, investors in small and mid-cap funds tend to benefit indirectly. How..?
“The good news for people who have invested in mid- and small-cap funds is that they will see their share prices rise due to accelerated purchases in the mid- and small-cap space by multi-cap funds in January. of the next year. We will see a rally in the medium and small space, “says Sunil Subramaniam, Managing Director of Sundaram Asset Management in a YouTube video uploaded by AMC.
Subramaniam further explains that investors in mid- and small-cap funds who have not had a very good experience since the market peak of December 2017 will see healthy returns on mid-cap and small-cap funds over the next year. He adds, “This will also lead to more inflows into small and mid-cap funds now.”
The multi-cap fund category is the largest category among equity-oriented mutual fund schemes with a 19% stake in actively managed equity-oriented schemes, along with the large-cap category which also constitutes equity. similar 19%, followed by the mid-cap (11.53%) and the large and mid-cap categories (7.5%). The multi-cap mutual fund category manages assets by value ₹Rs 1.46 million lakh as of August 31.
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