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How Flexibility Helps Flexi-Cap MFs

The New Indian Express Vellore

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March 17, 2025

In the last quarter of 2017, the Securities and Exchange Board of India (SEBI) introduced tightly defined categories of equity mutual funds based on market capitalization.

- ASHOK KUMAR

But it soon woke up to the fact that many Asset Management Companies (AMCs) that ran multi-cap funds had portfolios that more or less mirrored other categories such as large cap, large and mid-cap or even mid-cap and small-cap funds as it had set no pre-defined limits across market-capitalizations.

SEBI then announced that Multi Cap Funds are required to hold at least 75% of their assets in equity and equity-related instruments at any point in time.

Further, the portfolio must allocate at least 25% of its assets to large-cap stocks, 25% to mid-cap stocks, and another 25% to small-cap stocks. When the industry protested, SEBI back-tracked and created yet another category named Flexi-Cap Funds.

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