You must have read about the newcircular on of Multi Cap , and the commentary that followed. We’ll break this down for you in three parts – the context and content of the circular, the impact on your , and action required.
What is thecircular all about?
This circular is a continuation of SEBI’s “true to label” philosophy – get what you buy. It started with the re-categorisation done in 2017 to ensure that investors understood the objectives ofclearly. Now, wants multi cap to a minimum in large, mid, and small cap .
Earlier, Multi Capallowed fund managers a free hand in allocation as long as the minimum weightage to and related instruments was 65%.
With this circular, the above weightage needs to be 75% and fund managers will need to ensure:
Minimumin large cap companies: 25% of total assets
Minimumin mid cap companies: 25% of total assets
Minimumin small cap companies: 25% of total assets
How does this impact those with a Scripbox portfolio?
In your Long term Wealth/ Wealth Edge portfolio, we recommend twounder a sub asset class labelled as ‘ ’. These contain 6 different categories, including multi cap . One of our current recommendations is Kotak Standard Multicap (G). From our past recommendations, Parag Parikh Long Term -Reg(G), UTI -Reg(D), and Motilal Oswal Multicap 35 -Reg(G) are others that will come under the purview of this circular.
What should you do as a Scripbox investor?
At this point, nothing. Theneed to comply only by Jan 2021. Further, fund managers have options to comply with this without altering the composition of the . We’re keeping a close watch, and once the have communicated their strategy, we will recommend the next course of action to you.