SEBI introduces Flexi category for MFs

SEBI introduces Flexi category for MFs

The market regulator had introduced a ‘Flexi-cap category’ for the mutual funds that will now be required to invest at least 65% of the total corpus in the equities but will have no restrictions on investing in the large, mid, or small-cap company stocks.

In September 2020, the Securities and Exchange Board of India also came up with new regulations for the multi-cap funds in which they are required to invest at least 25% of the corpus in large, mid, and small-caps. It raised concerns among the industry professionals over the possibility of subsisting multi-cap funds being forced to buy mid- and small-cap stocks notwithstanding with the segments for not having the liquidity to absorb the large flows from Mutual funds. After the circular was circulated, the Association of MF in India, also known as Amfi, asked the Sebi to create a new Flexi-cap category, that will not have such requirements.

The new Mutual Fund category will also be called the Flexi-cap schemes. Existing schemes will be able to reclassify themselves. However, this will constitute a change in attributes, and such schemes will also have to giFlexie investors a 30-days window for exiting without any exit load. The option to convert an existing scheme into the fFlexicap is quite good. Rather than including new funds, fund houses should reform the existing multi-cap funds into flexi-cap. This will be better for investors.

SEBI has also rebuilt the pre-covid cut-off timings of Mutual Funds with effect from the 9th of November. They have sent a letter to AMFI in this regard, in which Mint has seen them a copy. In April, SEBI has also reduced the cut-off timings of all MFs from 3 pm to 1 pm and for the liquid and overnight schemes from 1.30 pm to 12.30 pm. This action accompanies the RBI move to extend debt market timings for most securities to 3.30 pm, also with effect from 9 November.