In big move, Sebi clears 'Flexi Cap Fund' as new category under Equity Mutual Fund schemes

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In a very big move today, market regulator, SEBI has given clearance for the introduction of a new category of equity mutual fund schemes. It has been dubbed as the ‘Flexi Cap Fund’. In its circular, SEBI had issued guidelines regarding categorization and rationalization of Mutual Fund Schemes. SEBI, in its statement said, “In order to give more flexibility to the mutual funds and taking into account the recommendations of Mutual Fund Advisory Committee (MFAC), a new category named “Flexi Cap Fund” under Equity Schemes will be available. “

Here are the scheme characteristics:

Category of Scheme: Flexi Cap Fund

Scheme Characteristics: Minimum investment in equity & equity related instruments – 65% of total assets

Type of scheme (uniform description of scheme): An open ended dynamic equity scheme investing across large cap, mid cap, small cap stocks

SEBI said that the asset management company (AMC) must ensure that a suitable benchmark is adopted for the Flexi Cap Fund.

SEBI has said that investors should not face any confusion regarding the scheme. It said, “For easy identification by investors and in order to bring uniformity in names of schemes for a particular category across Mutual Funds, the scheme name shall be the same as the scheme category.”

SEBI also said that Mutual Funds have the option to convert an existing scheme into a Flexi Cap Fund subject to compliance with the requirement for change in fundamental attributes of the scheme.

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SEBI said that scheme under this new category can be launched with effect from the date of this circular.