Axis MF moves scheme to new category after Sebi's multicap funds mandate

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Following Sebi’s directions mandating changes in multicap schemes, Axis Mutual Fund on Thursday renamed its multicap scheme and moved it to a new category where it will not be constrained by market cap restrictions. The new scheme will undergo changes on the fund allocation across asset classes, an official statement said.

Peeved at fund houses allocating a bulk of multicap fund investments in large cap stocks, capital markets regulator Securities and Exchange Board of India (Sebi) had in September asked fund houses to ensure at least 25 per cent of the assets under management are invested in small cap, mid cap and large cap stocks to ensure proper nomenclature.

As per a September media report, Axis Multicap Fund would have had to increase its midcap exposure by 14.3 per cent and small cap exposure by 16.1 per cent to comply with the Sebi requirements. Axis MF said its scheme, which entails renaming of Axis Multicap Fund’ to ‘Axis Flexicap Fund’ from January 31 onwards involves a movement to a new category where it will not be constrained by market cap restrictions.

Axis MF on Thursday said it is renaming ‘Axis Multicap Fund’ to ‘Axis Flexicap Fund’, which will be an open ended dynamic equity scheme that invests across large cap, mid cap, and small cap stocks to facilitate capital appreciation over medium to long term.

Axis Flexicap Fund will invest minimum 65 per cent to maximum 100 per cent in equity and equity-related investments, maximum 35 per cent in debt and money market investments, and maximum 10 per cent in units issued by real estate investment trusts and infrastructure investment trusts, the statement said.

The scheme will invest in debt instruments having structured obligations/credit enhancement as per limit prescribed by Sebi and amended from time to time, it said, adding not more than 20 per cent of the net assets of the Axis Flexicap Fund can be deployed in stock lending as per the current provisions.

It will be looking for stocks that are expected to report faster growth than the relative benchmark (this includes sustainable earnings growth potential, credible management and acceptable liquidity), considering current times, the statement said. We have been successfully managing this fund over the last three years and we believe that this change allows existing and prospective investors to participate in the strategy in the best manner, the statement said.

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