INSUBCONTINENT EXCLUSIVE:
The Securities and Exchange Board of India(Sebi) is looking at reclassification of mid-cap and small- cap mutual fund schemes, its chief
Ajay Tyagi said on Tuesday
The move is aimed at allowing these products to invest in a wider set of stocks, said mutual fund industry officials
The capital markets regulator has also asked for clarification from Franklin Templeton Mutual Fund on marking down the value of its Vodafone
Idea holdings mid-January.
In 2017, Sebi introduced categorisation and rationalisation of mutual funds schemes so that investors could make
accurate comparison of schemes
Earlier, each fund house would employ its own criteria for deciding the classification as there was no standard definition.
To ensure
uniformity, Sebi issued a list defining large cap, mid cap and small cap companies
The list is prepared once in six months by industry body AMFI ( Association of Mutual Funds in India) in consultation with Sebi and stock
exchanges.
Fund managers claimed the categorization had taken away their flexibility to invest, resulting in money flowing into a set of
companies in terms of market capitalisation would be considered as large caps, the 101st to 250th companies would be considered as mid-caps
and 251st onwards would be considered small caps.
Sebi has also stipulated minimum investment criteria for large, mid and small cap
According to this, a large-cap fund is required to maintain 80% of its portfolio in large cap stocks, while a mid-cap and small-cap fund
would have to maintain a minimum of 65% of its portfolio in these stocks.
Fund houses were divided over a change in this list
While some believed it is too early to look at a change as they are just getting used to the classification norms, a section believed the
lists should be expanded to give fund managers higher flexibility.
Separately, Tyagi said the regulator had sought comments from Franklin
NSE has approached Sebi to seek its approval for the IPO before it could appoint merchant bankers