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Sebi says mutual funds can merge multi-cap schemes, or re-position under different category

Regulator clarifies that re-balancing portfolios not the only option before fund managers

September 15, 2020 / 06:18 PM IST

The Securities and Exchange Board of India (Sebi) on September 13 clarified that multi-cap schemes need not necessarily churn their portfolios by selling largecap stocks or buying smallcaps in multi-cap schemes to meet the new norms, but can also exercise options such as merging schemes with largecap funds, re-positioning them as large- and midcap schemes, or facilitating unitholders' switch to another scheme.

The market regulator said that fund houses can use these options among other things and also added that it will examine if any proposals are submitted by the industry to meet desired objective of true-to-label and appropriate benchmarking.

Moneycontrol earlier reported that the mutual fund (MF) industry executives were set to meet Sebi to present a range of options, including scheme mergers, re-launching multi-cap funds as thematic funds, asking for a 'flexicap' category, and seeking more time from Sebi for implementation of the new norms.

In a release on September 13, Sebi said it was conscious of market stability and that is why it had given the industry time till January 31, 2021, to meet the new minimum limit norms pertaining to multi-cap funds.