Multi-cap rejig could create bubble in small- and mid-caps: Amfi

On September 11, the capital markets regulator issued a circular directing multi-cap schemes to deploy at least 25% each in large-, mid-, and small-caps

Industry body Association of Mutual Funds in India (Amfi) has said that aligning multi-cap schemes to comply with the new definition could lead to the creation of a bubble in small- and mid-caps.  

“The compulsion to deploy about Rs 26,000 crore in small-cap stocks and close to Rs 10,500 crore in mid-cap stocks — in a span of a few months — will most likely create a bubble in those two segments. Majority of small-caps and a large number of mid-caps are highly illiquid,” Amfi stated in a letter to the Securities and Exchange Board of India (Sebi), on September