Announcements

SEBI Adds Flexi Cap Fund Category In Equity Fund basket

November 7, 2020

SEBI Adds Flexi Cap Fund Category In Equity Fund basket

The Securities & Exchange Board of India, on Nov 6, has introduced a new category of the fund – Flexi Cap Fund under Equity schemes.

The Flexi Cap Fund will be in line with erstwhile Multi Cap funds and the fund manager can invest across large-cap, mid-cap, small-cap stocks and has to take equity exposure of a minimum 65% of the total assets.

This decision comes after the Mutual Fund Advisory Committee (MFAC) recommended the market regulator to give more flexibility to fund managers to maneuver across market capitalisation.

Prior to this circular, SEBI had asked fund houses to invest at least 75% of the total corpus across market capitalisation with at least 25% exposure each to large-cap, mid-cap, and small-cap stocks.

The market regulator has given an option to fund houses to either launch new Flexi Cap schemes or to convert existing schemes into a Flexi Cap fund which is subject to compliance of required conditions under the MF regulations.

The fund houses will have to use Flexi Cap nomenclature in their scheme, which means that the scheme’s name has to be “XYZ Flexi Cap Fund.”

As per some news reports, Nilesh Shah, MD Kotak Mutual Fund said that Kotak Standard Multi Cap Fund will be renamed as Kotak Standard Flexi Cap Fund subject to regulatory approvals. A few other mutual funds may also follow the suit.

But in such a case investors would get a 30-day exit window, wherein any investor can exit from the fund without any exit load as per regulations of fundamental attribute change.