The circular discusses asset allocation of multi cap funds and observes some schemes are focused only on large caps with little investment in small caps, behaving more like large cap funds. It defines a multi cap fund as one investing across large, mid, and small cap stocks with minimum 65% in equities. The circular sets new guidelines that multi cap funds must invest minimum 25% each in large, mid, and small caps to be truly multi cap. Funds not meeting these criteria must merge with a large cap fund or convert to another category like large mid cap.

2. NAME OF CIRCULAR: ASSET
ALLOCATION OF MULTI CAP FUNDS
CIRCULAR DATE : 11-09-2020

3. OBJECTIVE:
-TRUE TO LABEL SCHEME
-COMPARISONS WITH AN APPROPRIATE BENCHMARK

4. NEED:
THE REGULATORY BODY (SEBI) OBSERVED THAT THERE IS FOUL PLAY IN THE ASSET ALLOCATION OF SOME
MULTI-CAP SCHEMES. THESE SCHEMES ARE PURELY FOCUSED ON LARGE-CAP, ON ANOTHER SIDE ZERO IN
THE SMALL-CAP OR VERY LITTLE PORTION.
BASICALLY, THESE FUND SCHEMES ARE LARGE-CAP FUND SCHEMES.

5. MEANING OF MULTI CAP FUND
- AN OPEN ENDING EQUITY SCHEME INVESTING ACROSS LARGE, MID AND CAP STOCK.
- A FUND SCHEME, WHERE THE MINIMUM INVESTMENT IN EQUITY & EQUITY RELATED INSTRUMENTS – 65 % OF TOTAL
ASSETS
Large Cap Mid Cap Small Cap
1st -100th
Company in terms of full market
capitalization.
101st -250th
Company in terms of full market
capitalization.
Below 251st
Company in terms of full market
capitalization.

6. MINIMUM INVESTMENT IN EQUITY AND
EQUITY RELATED INSTRUMENTS
75% of total
assets
Large cap- 25%
of total asset
Mid cap- 25% of
total asset
Small cap- 25%
of total asset
Balance 25%, giving
flexibility to the fund
manager

7. CONDITION OF PREVIOUS CIRCULAR
- YES, APPLICABLE ON SAME MANNER.

8. CONCLUSION
- CHANGES ACCORDING TO THE CIRCULAR
- MERGE SCHEME WITH LARGE CAP SCHEME
- CONVERT MULTI CAP SCHEME TO ANOTHER SCHEME CATEGORY, E.G. LARGE CUM MID CAP SCHEME.

9. THANKING YOU
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