Livemint, Sep 14, 2020
• Multi-cap funds will need to invest at least 25% of portfolios in large-, mid- and small-caps each, says Sebi circular
• Existing schemes will have to comply with the circular within one month of Amfi publishing the new list of large-, mid- and small-cap stocks in January
Topics
In a circular released on Friday, the Securities and Exchange Board of India (Sebi) introduced a detailed portfolio structure for multi-cap funds. Such schemes must invest at least 25% of their portfolios in large-, mid- and small-caps each. Large-cap stocks are defined as the largest 100 stocks by market capitalization, mid-caps as the next largest 150 stocks and small-caps are all the stocks below the top 250 in size.
Existing schemes will have to comply with the circular within one month of the Association of Mutual Funds in India (Amfi) publishing the new list of large-, mid- and small-cap stocks in January 2021.
Currently, Sebi rules do not prescribe percentage allocations for large-, mid- and small-cap stocks for multi-cap funds. Such funds are given a high level of flexibility to move between these market caps. Some schemes of this nature such as PPFAS Long Term Equity also allocate a portion of their portfolio to international stocks (up to 35%). The circular is silent about which categories such stocks will fall in.
“The new circular makes multi-cap funds more true to label. These funds are currently overwhelmingly large-cap, making the distinction between the two categories a marginal one,” said Swarup Mohanty, CEO, Mirae Asset Mutual Fund. On average, multi-cap funds currently allocate 70% of their portfolios to large-cap stocks, 22% to mid-cap stocks and just 8% to small-cap stocks.
“In the short term, however, the lack of liquidity in mid- and small-caps can create impact cost for such funds,” said a senior fund manager, who declined to be named. Impact cost is the unfavourable movement of prices due to large buy or sell orders when liquidity is poor.
Multi-cap funds currently have assets under management of ₹1.46 trillion. Hence, a realignment of such funds can shift around ₹30,000 crore into mid- and small-caps over the next few months as these funds raise their mid- and small-cap allocation from 30% to 50% as required by the Sebi rules.
The actual flows could be higher if funds decide to take a higher mid- and small-cap weightage than what is required by the Sebi rules.
A fund manager of a mutli-cap fund, who spoke on the condition of anonymity, said that he may look at moving the scheme to another category such as focused or thematic to avoid the rigidity of the new rules. Such shifts in fund structures may soften the shock of heavy flows into mid- and small-caps.
“The USP of multi-cap funds is the flexibility to move between large-, mid- and small-caps. Rigidity of allocation puts a stop to this USP. Also, I’m not sure if the small-cap space has enough liquidity to support 25% of multi-cap portfolios. Then, the lack of flexibility is going to make it harder for active funds to deliver alpha,” said Prateek Pant, co-founder, Sanctum Wealth Management.
Registered Office: 1401,Tower 2, 14th floor, One International Center, Senapati Bapat Marg, Elphinstone Road, Mumbai 400013 Contact number: +91 22 61779500 | CIN: U74140MH2015PTC264932
Investor Complaint Handling
For any grievance or dispute please contact us at the above address and phone number or send us an email to. grievance@sanctumwealth.com.
In case of escalation, please reach out to the Compliance Officer at Email: compliance@sanctumwealth.com; Contact: +91 22 61779562 or the CEO at Email: ceo@sanctumwealth.com; Contact: +91 22 61779561
Portfolio Management Services and Research Services: : In case of any grievance / complaint, please contact the Compliance Officer or the CEO.
Broking and Demat: Complaint Filing Process
In case you are not satisfied with the response, you may contact the stock exchanges or depository directly: (NSE) Tel: +91 22 26598190 / 1800 2200 58 (Toll free) or Email: atignse@nse.co.in; (BSE) Tel: +91 22 22728517 or Email: is@bseindia.com; (NSDL) Tel.: +91 22 24994200 /
Toll free (Investor Helpline): 1800 1020 990 / 1800 224 430 or Email: relations@nsdl.co.in or Click here to submit Complaint / Query online.
If you are not satisfied with the response, you can further lodge your grievances with SEBI at SCORES or you may also write to any of the offices of SEBI. For any queries, feedback or assistance, please contact SEBI Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575
SCORES Website link : https://investor.sebi.gov.in | Saa₹thi 2.0 Mobile App: https://www.sanctumwealth.com/saarthi-app-digital
After exhausting the available options for resolution of dispute, if you are still not satisfied with the outcome, you may avail online conciliation and / or online arbitration through Online Dispute Resolution portal (SMART ODR portal) https://smartodr.in/login. SEBI Master Circular for Online Resolution of Disputes (for reference) : Download
Key Managerial Personnel
Shiv Gupta CEO & Designated Director | Email: ceo@sanctumwealth.com | Contact: +91 22 61779561
Nitin Nath Designated Director | Email: nitin.nath@sanctumwealth.com | Contact: +91 22 61779576
Mridula Iyengar Compliance Officer | Email: compliance@sanctumwealth.com | Contact: +91 22 61779562
Tanmay Kejriwal COO | Email: tanmay.kejriwal@sanctumwealth.com | Contact: +91 22 61779575
Investor Awareness
Trading and investments in Securities are subject to market risk, there is no assurance or guarantee of returns.
Please read the PMS Disclosure Document, Risk Disclosure Document and Dos and Don’ts prescribed by the Exchanges and Mutual Fund Offer Documents carefully before investing.
e-Voting: To participate in the process of e-Voting, please click on the following links: https://evoting.nsdl.com or https://www.evotingindia.co or https://eservices.nsdl.com
Dear Investor,
As you are aware, under the rapidly evolving dynamics of financial markets, it is crucial for investors to remain updated and well-informed about various aspects of investing in securities market. In this connection, please find a link to the BSE Investor Protection Fund website where you will find some useful educative material in the form of text and videos, so as to become an informed investor.
https://www.bseipf.com/investors_education.html
We believe that an educated investor is a protected investor !!!
Attention Investors: No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No need to worry about the refund either, as the money remains in the investor’s account. Prevent Unauthorized Transactions in your demat and broking account −> Update your mobile numbers/email IDs with your stock brokers and depository participants. Receive information of your transactions directly from Exchange & NSDL on your mobile/email at the end of the day..... Issued in the interest of Investors. (Ref Circular No : NSE/INSP/27346, BSE/ 20140822-30, NSDL 2014/94/97 & 2015 / 104). KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Registered Office:
1401,Tower 2, 14th floor,
One International Center,
Senapati Bapat Marg,
Elphinstone Road, Mumbai 400013
Contact number: +91 22 61779500
| CIN: U74999MH2017PTC302008 |
Real Estate Regulatory Authority License no. (A51900011805)