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Regulator SEBI will soon be announcing changes in new norms on investments made by multi-cap funds after considering the AMFI proposal. The watchdog recently made it mandatory for multi-cap funds to invest 25 per cent each in large-, mid- and small-caps to ensure that the fund remains true to its label.
Addressing the mutual fund industry on the 25th Annual General Meeting of AMFI, SEBI Chairman Ajay Tyagi said the recent mandatory multi-cap fund investment of 25 per cent each in large-, mid- and small- caps is being implemented to ensure that the fund remains true to its label.
“It is not the intention of the regulator to force the industry to invest in anything. In this regard, AMFI has made its representation which is being examined actively and an announcement would be made soon,” he added without committing on whether a new 'flexi-cap' category is being considered.
Influx of retail investors
On the issue of upfront margin norms for equity trading, Tyagi said on an average about six lakh new demat accounts were being opened in a month, but since June 10 lakh new accounts are being opened a month, indicating influx of retail investors in the equity market.
“We have observed that margins are collected in pool account and funds of one investor is used for others besides ploughing it through proprietary account, leading to broker defaults in recent times. This issue has been addressed by the new upfront margin norms and there is no plan to have a relook at it,” he said.
SEBI is also deliberating on having a limited purpose central clearing corporation for guaranteed settlement of tri-party repo trades in all investment grade corporate bonds, including below AAA rated, to boost rep- trading in corporate bonds.
As a word of caution, Tyagi said mutual funds are not banks and should not attempt to behave like one. Unlike banks, mutual funds do not have the ‘lender of last resort’ comfort as banks have from RBI, he said.
Despite higher inflow into mutual funds, the share of investment from beyond 30 cities has hovered at about just 15-17 per cent over the last four years.
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