In November, SEBI had introduced a new equity mutual fund category - flexi-cap.
The regulator did this closely on the heels of tweaking the investment mandate of multi-cap funds. As per their revised investment mandate, multi-cap funds are required to invest at least 25 per cent of their assets each in large-, mid- and small-cap stocks. This is quite restrictive in comparison to their older mandate, which allowed the fund manager to invest freely across the market-capitalisation range in any proportion. This change, effective January 2021, has drawn criticism from investors as well as industry experts as it would require many funds in the category to significantly alter their existing portfolios and in turn, their expected risk-reward outcomes.
Heeding to their requests, SEBI minted a new flexi-cap category which has inherited the old, unconstrained mandate of multi-cap funds. It is now widely anticipated that several of the existing multi-cap funds may opt to re-categorise themselves as flexi-cap funds.
The below table lists the multi-cap funds which have already announced their decision to switch to the flexi-cap category. We will keep updating it as more funds confirm their transition.
Do not worry if you find your fund(s) listed below. As mentioned above, this change doesn't really mean much other than a change in the name. It will likely translate into continuity in investment style and the underlying portfolio for these funds.
Funds moving from multi-cap to flexi-cap category
|Existing name||New name||Effective from|
|Aditya Birla Sun Life Equity Fund||Aditya Birla Sun Life Flexi Cap Fund||30/01/2021|
|Axis Multicap Fund||Axis Flexi Cap Fund||30/01/2021|
|BOI AXA Multi Cap Fund||BOI AXA Flexi Cap Fund||03/02/2021|
|Canara Robeco Equity Diversified Fund||Canara Robeco Flexi Cap Fund||10/02/2021|
|DSP Equity Fund||DSP Flexi Cap Fund||28/01/2021|
|Edelweiss Multi Cap Fund||Edelweiss Flexi Cap Fund||28/01/2021|
|Franklin India Equity Fund||Franklin India Flexi Cap Fund||29/01/2021|
|HDFC Equity Fund||HDFC Flexi Cap Fund||29/01/2021|
|HSBC Multi Cap Equity Fund||HSBC Flexi Cap Fund||28/01/2021|
|IDBI Diversified Equity Fund||IDBI Flexi Cap Fund||30/01/2021|
|IDFC Multi Cap Fund||IDFC Flexi Cap Fund||09/02/2021|
|JM Multicap Fund||JM Flexicap Fund||30/01/2021|
|Kotak Standard Multicap Fund||Kotak Flexicap Fund||01/02/2021|
|L&T Equity Fund||L&T Flexicap Fund||09/02/2021|
|LIC MF Multicap Fund||LIC MF Flexi Cap Fund||08/02/2021|
|Motilal Oswal Multicap 35 Fund||Motilal Oswal Flexicap Fund||06/02/2021|
|PGIM India Diversified Equity Fund||PGIM India Flexi Cap Fund||31/01/2021|
|Parag Parikh Long Term Equity Fund||Parag Parikh Flexi Cap Fund||13/01/2021|
|Shriram Multicap Fund||Shriram Flexi Cap Fund||29/01/2021|
|Taurus Starshare (Multi Cap) Fund||Taurus Flexicap Fund||31/01/2021|
|Union Multi Cap Fund||Union Flexi Cap Fund||28/01/2021|
|UTI Equity Fund*||UTI Flexi Cap Fund||12/02/2021|
Some funds, however, have decided to remain in the multi-cap category. Since most funds in the category have maintained a large-cap-heavy portfolio, their decision can mean that the portfolio of these funds will have to undergo significant changes.
The following is the list of funds that have announced that they would remain in the multi-cap category. Going by their average allocations to large-, mid- and small-cap stocks in the last one year, we have also provided an indicative percentage of the portfolio that will need to be shifted to a different market cap segment to comply with the new investment mandate of the multi-cap category.
Maintaining the status quo
|Scheme Name||Large cap (%)*||Mid cap (%)*||Small cap (%)*||Expected shift in market cap allocation (%)**||Degree of change in portfolio|
|ICICI Prudential Multicap Fund||72||16||9||25||High|
|*1-year average holdings|
**Indicative shifts in market cap allocation to comply with new SEBI mandate, based on last one year's average allocations