Sebi clarifies on asset allocation norms for multicap schemes

It said mutual funds have many options to meet with the requirements of its circular pertaining to asset allocation framework for multi cap schemes based on the preference of their unit holders.

The Securities and Exchange Board of India (Sebi) on Sunday said it will examine the proposals of the mutual fund industry regarding the changes the regulator had announced on Friday in the asset allocation of multicap schemes. According to Sebi, these changes were made to achieve the objective of the true-to-label and appropriate benchmark.

It also said mutual funds have many options to meet with the requirements of its circular pertaining to asset allocation framework for multi cap schemes based on the preference of their unit holders.

The regulator said the need was felt to review characteristics of multicap schemes and take necessary steps to clearly distinguish multicap schemes from other categories. Sebi clarified that apart from rebalancing their portfolio in the multicap schemes, they could inter-alia facilitate switch to other schemes by unit holders, merge their multicap scheme with their large cap scheme or convert their multicap scheme to another scheme category. Fund houses have been given time till January 31, 2020 to achieve compliance with the circular.