Index weighting conundrum: Mutual fund industry knock on Sebi's door

They feel regulator should allow active funds to invest above the prescribed single-stock limit

The mutual fund industry has approached the Securities and Exchange Board of India (Sebi) to highlight concerns over higher weighting of individual stocks in benchmark indices, said three people familiar with the matter.

The problem has come to the fore after the recent run-up in the Reliance Industries (RIL) stock, which has posed a challenge to fund managers, as active funds aren’t permitted to hold more than 10 per cent in a single stock in a particular scheme. In addition, individual fund houses could have softer limits that prevent buying a stock above certain thresholds, say 5 per cent or 7.5