**Summary:**
This circular, issued by the Securities and Exchange Board of India (SEBI) on September 11, 2020 (SEBI/HO/IMD/DF3/CIR/P/2020/172), modifies the scheme characteristics of Multi Cap Funds as outlined in the circular SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06, 2017, regarding categorization and rationalization of Mutual Fund Schemes. The modification mandates that Multi Cap Funds must maintain a minimum investment of 75% of total assets in equity and equity-related instruments, distributed as follows: a minimum of 25% of total assets in large-cap companies, a minimum of 25% of total assets in mid-cap companies, and a minimum of 25% of total assets in small-cap companies. Existing Multi Cap Funds are required to comply with these provisions within one month from the date of publishing of the next list of stocks by AMFI, i.e., January 2021. All other conditions specified in the circular dated October 06, 2017, remain unchanged. This directive is issued under the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, to protect investor interests and regulate the securities market. For further information, contact Deena Venu Sarangadharan, Deputy General Manager, at 022-26449266 or deena.rs@sebi.gov.in.
Key Entities Referenced
Securities and Exchange Board of India: Regulatory body issuing the circular.
Mutual Funds (MFs): Entities regulated by the circular.
Asset Management Companies (AMCs): Entities regulated by the circular, managing the Mutual Funds.
Association of Mutual Funds in India (AMFI): Industry association referenced for publishing the list of stocks.
Multi Cap Funds: Type of mutual fund scheme which is the subject of the circular.
Securities and Exchange Board of India Act, 1992: The Act under which the circular is issued.
Securities and Exchange Board of India Mutual Funds Regulations, 1996: Regulations referenced in the circular.
October 06, 2017: Date of the previous circular regarding categorization and rationalization of Mutual Fund Schemes.
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Securities and Exchange Board of India
CIRCULAR
SEBI/HO/IMD/DF3/CIR/P/2020/172 September 11, 2020
All Mutual Funds (MFs)/
Asset Management Companies (AMCs)/
Trustee Companies/ Board of Trustees of Mutual Funds/
Association of Mutual Funds in India (AMFI)
Sir / Madam,
Subject: Asset Allocation of Multi Cap Funds
1. SEBI vide circular no. SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06,
2017, has issued guidelines regarding categorization and rationalization of
Mutual Fund Schemes.
2. In this regard, in order to diversify the underlying investments of Multi Cap
Funds across the large, mid and small cap companies and be true to label, it
has been decided to partially modify the scheme characteristics of Multi Cap
Fund at sr. no. 1 of point A of Annexure of the aforesaid circular as under:
Minimum investment in equity & equity related instruments -75% of total
assets in the following manner:
o Minimum investment in equity & equity related instruments of large
cap companies - 25% of total assets
o Minimum investment in equity & equity related instruments of mid
cap companies - 25% of total assets
o Minimum investment in equity & equity related instruments of small
cap companies - 25% of total assets
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Securities and Exchange Board of India
2.1. All the existing Multi Cap Funds shall ensure compliance with the above
provisions within one month from the date of publishing the next list of
stocks by AMFI, i.e. January 2021.
3. All other conditions specified in aforesaid circular dated October 06, 2017
shall remain unchanged.
4. This circular is issued in exercise of the powers conferred under Section 11
(1) of the Securities and Exchange Board of India Act, 1992, read with
Regulation 77 of the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996 to protect the interests of investors in securities and to
promote the development of, and to regulate the securities market.
Yours faithfully,
Deena Venu Sarangadharan
Deputy General Manager
Tel no.: 022-26449266
Email: deenar@sebi.gov.in
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