Mumbai: In a clarification issued on Sunday, the SEBI said apart from rebalancing their portfolio in the multi-cap schemes, mutual funds could facilitate switch to other schemes by unit-holders, merge their multi-cap scheme with their large-cap scheme or convert their multi-cap scheme to another scheme category, for instance, large-cum-mid-cap scheme.
Kotak Mutual Fund has welcomed the SEBI clarification.
Nilesh Shah, Managing Director, Kotak AMC, said in a tweet: “Immense gratitude to SEBI for issuing clarification on a Sunday evening. We will ensure compliance with SEBI Regulations in letter as well as spirit & optimize risk adjusted return for our Investors. Don’t take Investment decisions in haste.”
The SEBI said it is conscious of market stability and therefore, has given time to mutual funds till January 31, 2021 to achieve compliance with the circular, through their preferred route, of which rebalancing of the portfolio is only one such route.
“It is reiterated that to achieve the desired objective of True to Label and Appropriate Benchmarking, the SEBI will examine proposals of the industry, if any, received in this regard,” it said.
The SEBI has issued a circular dated September 11, on multi-cap schemes of mutual funds, requiring them to invest a minimum of 25 per cent each in large, mid and small-cap stocks, with the balance 25 per cent giving flexibility to the fund manager.
The regulator said the circular was issued as a need was felt to review the scheme characteristics of multi-cap schemes and take necessary steps to clearly distinguish these from other category of schemes.
