New small-cap MF investing rule likely

THE Securities and Exchange Board of India (Sebi) is open to revising rules for the mutual fund industry investing in small-cap stocks amid growing concerns related to overstretched valuations and sudden dumping of shares in this category.

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The capital market regulator will review its rule that mandates small-cap and mid-cap funds to invest a minimum of 65% of their assets in such stocks if fund managers find it is restraining risk management, said Sebi Chairwoman Madhabi Puri Buch on Monday. As per the norms, the remaining amount can be further invested in mid-cap/small-cap shares with some allocation to large-caps, cash and other assets. Buch's comments come weeks after Sebi told mutual funds (MFS) to frame a policy to protect the interest of investors following a sell-off in small, mid-cap, and micro-cap stocks.&nb