The Securities and Exchange Board of India vide its notification dated 13th September 2020 has issued a clarification to its earlier circular on portfolio allocation rules for multi-cap funds in which it has felt the need to review the scheme characteristics of Multi-Cap schemes and take necessary steps to clearly distinguish Multi-Cap schemes from other categories of schemes.
Thus Sebi has clarified that mutual funds have many options to meet with the requirements of the circular, based on the preference of their unitholders. Apart from rebalancing their portfolio in the multi-cap schemes, they could inter-alia facilitate a switch to other schemes by unitholders, 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.
SEBI has said that fund houses can use these options among other things and also added that it will examine if any proposals are submitted by the industry to meet desired objective of true-to-label and appropriate benchmarking.
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