After the Securities and Exchange Board of India (SEBI) providing an exit route in the form of Flexi Cap Fund category, following the market regulator’s directive to the Asset Management Companies (AMCs) in January 2021 to have the portfolio allocation of Multi Cap Funds at least 25 per cent each in Large, Mid and Small Cap companies, while the rest 25 per cent may be allocated flexibly.
The directive resulted in lots of confusion, as at that time most of the existing Multi Cap Funds had majority of allocation in large-cap companies and a very small portion comprised the stocks of small-cap companies.
Realigning the portfolios to accommodate 25 per cent small-cap stocks would have increased the risk factor of the funds manifold, creating inconvenience for the existing investors and the performance of the funds would have derailed as well.
So, after providing the exit route by the SEBI, most of the AMCs converted their existing Multi Cap Funds to Flexi Cap Fund.
To fill the void after converting its original Multi Cap Funds to Flexi Cap Fund, the SBI Mutual Fund has decided to launch the SBI Mulitcap Fund.
Fund Details
The New Fund Offer (NFO) period of the SBI Multicap Fund is from February 14, 2022 to February 28, 2022.
As per the guidelines defined by the SEBI, the portfolio of the SBI Multicap Fund will have stocks of 25 per cent each in Large, Mid and Small Cap companies, while the allocation of the remaining 25 per cent of the fund will be flexible.
The flexible 25 per cent of the fund may be allocated in full in any of the Large, Mid or Small Cap category to have the maximum allocation of 50 per cent in that category or partially in the three categories, or the entire flexible amount may also be invested in Debt Securities and Money Market Instruments, or up to 10 per cent of the fund may be invested in units of REITs and InvITs.
It is an open ended scheme managed by R. Srinivasan and Mohit Jain and have NIFTY 500 Multicap 50:25:25 TRI Index as its benchmark.
The minimum investment amount for lump sum investment is Rs 5,000 and for monthly SIP, the minimum amount is Rs 500.
Suitability
With the flavour of all three categories of companies – viz. Large, Mid and Small Cap – the fund will have a high degree of diversification.
However, with the provision of allocating up to 50 per cent of the fund in high-risk small-cap companies, the risk factor associated with the fund is also high.
So, the investors with high risk tolerance capacity may invest their long-term money in this fund.
