The Security and Exchange Board of India's (SEBI) decision to introduce a new category 'Flexicap' has been welcomed by broking firms.
"This is a very good decision by the regulator in the interest of investors who want complete flexibility in ownership of companies across market cap buckets. Investors would rely more on the fund managers capabilities and decisions to decide market cap bias," said Mr Akhil Chaturvedi - Associate Director & Head of Sales, Motilal Oswal AMC.
After the confusion caused by the recent change in fund allocation in multi-cap category mutual funds, the Securities and Exchange Board of India (SEBI), on Friday, introduced a "Flexi-Cap Fund" category in mutual funds. These schemes will have to invest at least 65 percent of the total corpus in equities and equity-related instruments, across large, mid and small-cap stocks. However, unlike multi-cap funds, there will be no restrictions on how much could be allowed to a certain market cap category.
"This also would give flexibility to managers to make investment decisions basis their conviction on the companies irrespective of their market caps. Since this a new category which is getting created, most multicap funds may get their schemes reclassified in to flexi cap category. Further, multicap category is an additional option available to managers as product option which will be managed as per market cap ceilings prescribed by SEBI," said Mr. Chaturvedi.