Nilesh Shah, President of Amfi and Managing Director of Kotak Mahindra Mutual Fund, has asked Sebi to form a new category, called the ‘flexi cap’ to avoid a major disruption to existing multi-cap funds amid new allocation rules of purse. Nilesh Shah discussed the option with distributor partners a few days ago, where he said: “We will ask (Sebi) to consider creating a Flexi Cap category inside or outside of the multicap category to ensure that there is minimal disturbance to the portfolio while it complies with the True to Label label for Multicap Funds “.
The AMC has already sent the recommendation to Amfi. In response to a query from Mint Digital, AMC said: “We have submitted this suggestion to AMFI. AMFI will explore several options, including one suggested by us with industry participants before sharing the suggestions with SEBI.”
Kotak Mutual Fund, led by Nilesh Shah, manages the Kotak Standard Multicap Fund, the largest scheme in the multi-cap category with assets by value ₹29,700 crore. Nilesh Shah also assured that AMC will not buy small and mid-cap stocks if it does not make sense for shareholders, contrary to what is speculated on the street.
Kotak Standard Multicap Fund has a large cap bias with around 70% of its portfolio invested in the top 100 stocks by market cap.
Kotak Mutual Fund does not anticipate any substantial changes to its investment process due to the SEBI circular on asset allocation of multi-cap funds, Shah assured investors.
Nilesh Shah discussed various options available for the scheme with the distribution partners. He said an option will be chosen based on due process of law and the proper approval of stakeholders, trustees and regulators.
“We will consider various options to ensure full compliance with SEBI regulations and the management / protection of the interests of our stakeholders. Some of the options under consideration include:
- return money to customers
- requesting a change to our other equity funds with the help of our partners
- merge a multi-cap fund with a large-cap or mid-large-cap fund to maintain the investment process and portfolio quality
- converting a multi-cap fund into a thematic fund like the ESG fund to maintain the investment process and portfolio quality, “said Nilesh Shah in his interaction with distributors.
Shah said, “As in balanced funds, it is possible to manage conservative or aggressive hybrid funds, in the same way in the multi-capitalization category it is possible to manage multiple capitalization (with a minimum allocation according to the new circular for large, mid-caps and small stocks) and ‘Flexi Multicap’ (with flexible allocation to large cap mid- and small-cap stocks) “.
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