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The market regulator last week announced that multi-cap mutual fund schemes—a popular investment category—will have to have at least 25% of asset allocation each in large-, medium-, and small-cap stocks.
For a variety of reasons, most schemes in this category were heavily skewed towards large caps. And with five months to meet the new regulations, it led to estimates that around Rs 27,000 crore would have to flow into small caps and Rs 13,000 crore into mid-cap stocks.
The Securities and Exchange Board of India stepped in quickly, clarifying that mutual funds would have several options apart from restructuring the portfolios in multi-cap schemes to meet the new norms. These would include merging multi-cap schemes with others or facilitating a switch to other schemes…