Sebi chief Ajay Tyagi on Tuesday said the markets regulator is not forcing anyone to invest in small-caps and investment should always be in the interest of investors amid new portfolio allocation rules for multi-cap mutual fund schemes.
He further said multi-cap mutual fund schemes should be “true to label”.
The regulator, earlier this month, directed multi-cap funds to invest at least 25 per cent of their corpuses each in large-cap stocks, mid-caps and small-cap stocks.
This raised concerns among the mutual fund industry and fund managers estimated that the move would result into Rs 30,000-40,000 crore moving out of large-cap to mid-cap and small-cap companies.
Earlier, there was no restriction on the exposure such funds needed to make in large, mid and small-cap stocks and therefore majority of the multi-cap funds have run with a large-cap bias.
“Multi-cap form should be as per their name. We are not forcing anyone to invest in these caps (small-cap, mid-cap) and investment should be in the interest of investors,” Tyagi said while addressing industry body Amfi’s 25th annual general meeting.
According to him, improper categorization of mutual fund schemes will lead to confusion and mis-selling.
“Schemes not true to label will create confusion in the minds of investors,” Tyagi said.
He further said Sebi has received representations from the Association of Mutual Funds in India (Amfi) on the multi-cap schemes and the regulator will take a call on the suggestions given by the industry body.
Tyagi said debt mutual funds must remember that there is a difference between investing and lending.
Mutual funds are not banks and should not attempt to behave like one, and they must protect the interest of unitholders, he added.
“Debt mutual funds are not banks and should not behave like one,” Tyagi said.
With regard to market, Tyagi said uncertainty in markets continue to prevail although steps by RBI and Sebi have helped reduce the volatility.