Capital market regulator SEBI has asked multicap funds to keep at least 25% of their investment in large, mid and smalcap, each segment. This will definitely benefit the Smalcap segment as they will increase investment. But this will make it very difficult for investors to protect the hope that they get a lot of returns on investment.
SEBI has framed a new rule. Due to this rule, the MultiCap fund will have to put a large part of the investors ' amount in small and MidCap mean medium level companies. The companies will have to complete the process of placing the multicap fund in at least 25% of its assets in large, mid and smalcap stocks by January 31 next year. SEBI believes that these funds will truly be multicap funds. According to the regulator, a multicap fund should represent companies of all sizes.
However, if you take note of the definition of large, mid and smalcap funds, this limit of 25% will ensure more representation of mid and smalcap in multicap funds. If you define sebi's definition in the equity market, 74.1% of the market value is in LargeCap, 15.6% in MidCap and the remaining 11.3% in SmallCap. If there is a truly multicap fund and it is also representing the equity market properly, any limit should be around this value. At the same time, there may be many changes.
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