We have watched the mutual fund industry evolution in a variety of ways, whether in terms of products or rules. In October 2017, the Securities and Exchange Board of India (SEBI) issued a circular requiring mutual fund companies to have a standardized category with established requirements. This was a very welcome step by SEBI since it allowed investors to accurately identify the category and make a decision based on the characteristics of distinct categories. It also ordered the asset management companies (AMC) to have no more than one fund in each category. This also helped to reduce unneeded misunderstanding among investors.
The main goal of SEBI's mutual fund rationalization is to provide some standards in mutual funds and make mutual funds true to their label. However, SEBI discovered that there was one such group in equity mutual funds that did not live up to its name. This category included multi-cap funds. By definition, erstwhile multi-cap funds were free to invest throughout the market capitalization. The primary goal of this fund was to alternate between large-cap, mid-cap and small-cap exposures. However, the majority of the funds focused solely on large-cap stocks and had relatively minimal allocations to mid-cap and small-cap stocks over market cycles.
In light of this, SEBI issued a circular in September 2020 requiring multi-cap funds to invest at least 25 per cent each in large-cap, mid-cap and small-cap stocks. This caused turmoil in the financial markets since investors expected a significant sell-off in large-cap companies along with increased purchasing in mid-cap and small-cap firms. This concept, however, was put to rest when SEBI approved a new mutual fund category called as flexi-cap in November 2020. Flexi-cap funds are free to invest throughout the market capitalization spectrum.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
