Multi-cap funds and the latest Sebi directive

Earlier, the minimum investment in equity and equity-related instruments was 65 per cent of total assets.

Capital market regulator Securities and Exchange Board of India (Sebi) on Friday, September 11, tweaked the asset allocation guidelines for multi-cap funds in order to diversify the underlying investments of the fund across the large, mid-and small-cap companies and be "true to label".

Here is a quick explainer on what multi-cap funds are and what the latest directive means for the market and fund managers.

What are Multi-Cap Funds?

A multi-Cap fund is a type of equity mutual fund that invests in companies across all three market capitalisation (m-cap) i.e. large-caps, mid-caps, and small-caps. As per Sebi's circular dated October 6, 2017, the