The buying of small-cap stocks will be more significant.SEBI’s new schemes have pointed out some important changes in the asset allocation regulations for multi-cap mutual fund schemes
New guidelines introduced by SEBI have definitely left a huge impact on the small and mid-cap space. The experts have suggested that some money of mutual funds will move from large caps space to small & midcap stocks, especially for those who have strong fundamentals and have sufficient liquidity. The MFs can also facilitate a switch to other schemes for unit-holders, or merge the Multi-cap and Large-cap scheme or change it to another scheme category. However, some amount of money will be charged which will give chase to small & midcaps.
According to Data, Multi-cap schemes of mutual funds have an AUM of Rs 1.47 trillion for Aug 2020 covering large, mid, and small caps accounting for respective percentages of 74%, 16%, and 6%.
As per the guidelines, a multi-cap scheme has to invest 10 percent more from the previous value 65% as the minimum value of its corpus in equity. The large-cap allocation can scale from a minimum of 25 percent to a maximum of 50 percent. All multi-cap schemes will need to follow these revisions latest by Feb 2021.