Kotak Mutual Fund to launch multicap fund, NFO opens on September 8

Representative image

Kotak Mutual Fund, which runs the largest flexicap fund, announced the launch of a multicap fund.

The new fund offer (NFO) will open for subscription between September 8, 2021, and September 22, 2021.

The multicap category has opened up for mutual funds after SEBI redefined the category.

The new multicap category

Earlier, there were no limits on the investment of a multicap fund. But, in September 2020, SEBI said that multicap funds must invest at least 25 percent each in large-cap, mid-cap, and small-cap stocks.

This was done as most multicaps had become large cap-heavy and did not adequately invest in mid-and small-cap stocks.

MF industry interpreted the rules to suggest that fund managers had the flexibility in the multicap funds, while SEBI saw it as a category that gives investors adequate exposure across the market cap of listed companies.

After the MF industry’s requests, SEBI allowed erstwhile multicap funds to be repositioned as flexicap funds. So, a re-defined multicap category opened up for fund houses, which they are now filling.