This Securities and Exchange Board of India (SEBI) circular (SEBI/HO/IMD/DF3/CIR/P/2020/228) dated November 06, 2020, introduces a new category of equity scheme called "Flexi Cap Fund" for all Mutual Funds (MFs) and Asset Management Companies (AMCs). This circular aims to provide more flexibility to mutual funds, acting on recommendations from the Mutual Fund Advisory Committee (MFAC). A Flexi Cap Fund is defined as an open-ended dynamic equity scheme requiring a minimum investment of 65% of total assets in equity and equity-related instruments, with the ability to invest across large-cap, mid-cap, and small-cap stocks. AMCs must adopt a suitable benchmark for these funds, and scheme names should align with the category name for uniformity. Existing schemes can be converted into Flexi Cap Funds, subject to compliance with SEBI regulations regarding changes in fundamental attributes. This circular is effective from the date of issue, and new schemes under this category can be launched immediately. The circular is issued under 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. For further information, contact Bithin Mahanta, General Manager, at 022-26449364 or bithin@sebi.gov.in.
Key Entities Referenced
Securities and Exchange Board of India: Regulatory body for securities market in India; issued the circular.
Mutual Funds: Refers to the collective investment schemes regulated by SEBI.
Asset Management Companies: Entities managing the Mutual Funds.
Association of Mutual Funds in India: Industry body of mutual funds in India.
Flexi Cap Fund: A new category under Equity Schemes introduced by SEBI.
Equity Schemes: A category of Mutual Fund Schemes.
Mutual Fund Advisory Committee: Committee that provided recommendations for the introduction of Flexi Cap Fund
Securities and Exchange Board of India Act, 1992: The act under which SEBI's powers are defined.
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Securities and Exchange Board of India
CIRCULAR
SEBI/HO/IMD/DF3/CIR/P/2020/228 November 06, 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: Introduction of “Flexi Cap Fund” as a new category under Equity
Schemes
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 order to give more flexibility to the mutual funds and taking into account the
recommendations of Mutual Fund Advisory Committee (MFAC), a new
category named “Flexi Cap Fund” under Equity Schemes will be available with
the following scheme characteristics.
Category Scheme Characteristics Type of scheme (uniform
of description of scheme)
Scheme
Flexi Cap Minimum investment in equity An open ended dynamic equity
Fund & equity related instruments - scheme investing across large
65% of total assets cap, mid cap, small cap stocks
3. The AMC shall ensure that a suitable benchmark is adopted for the Flexi Cap
Fund.
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Securities and Exchange Board of India
4. For easy identification by investors and in order to bring uniformity in names of
schemes for a particular category across Mutual Funds, the scheme name
shall be the same as the scheme category.
5. Mutual Funds have the option to convert an existing scheme into a Flexi Cap
Fund subject to compliance with the requirement for change in fundamental
attributes of the scheme in terms of Regulation 18(15A) of SEBI (Mutual
Funds) Regulations, 1996.
6. Scheme under the aforesaid mentioned new category can be launched with
effect from the date of this circular.
7. 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,
Bithin Mahanta
General Manager
Tel no.: 022-26449364
Email: bithinm@sebi.gov.in
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