BQ Big Decisions: Should You Stop Or Avoid Investing In Multi-Cap Schemes?
What should you do about investments in multi-cap equity schemes after the SEBI’s latest rule change?
BloombergQuint’s Big Decisions podcast gets you the insights you need to make big money decisions with confidence.
The market regulator last week announced that multi-cap mutual fund schemes—a popular investment category—will have to have at least 25% of asset allocation each in large-, medium-, and small-cap stocks.
For a variety of reasons, most schemes in this category were heavily skewed towards large caps. And with five months to meet the new regulations, it led to estimates that around Rs 27,000 crore would have to flow into small caps and Rs 13,000 crore into mid-cap stocks.
The Securities and Exchange Board of India stepped in quickly, clarifying that mutual funds would have several options apart from restructuring the portfolios in multi-cap schemes to meet the new norms. These would include merging multi-cap schemes with others or facilitating a switch to other schemes by unitholders.
Asset managers like Kotak Mahindra Asset Management and Parag Parikh Financial Advisory Services Mutual Fund, too, tried to calm nerves, saying they would work towards meeting the new norms with as little disruption as possible.
However, for investors who pump in money regularly in such schemes, either through lump sum or systematic investment plans, and even those who have substantial amounts parked in them, the question remains—should they withdraw their funds and stop future investments?
On this BQ Big Decisions podcast, BloombergQuint spoke with Harshvardhan Roongta, certified financial planner and co-founder of Roongta Securities, to understand the thinking behind the new regulation, the challenges mutual funds are likely to face, and most importantly what investors should do when it comes to multi-cap equity schemes.
Listen in...