If your multi-cap fund becomes much riskier after new Sebi rules, exit it

Wait until your fund house communicates a change of mandate before you decide on your course of action

The Securities and Exchange Board of India’s (Sebi) September 11 circular asking multi-cap funds to have a minimum allocation of 25 per cent each to large-cap, mid-cap, and small-cap stocks will change the risk and return profile of these funds significantly.

Through a subsequent circular, Sebi has said that fund houses may comply either by switching their unitholders to another category, merging their multi-cap fund with a category such as large-cap, or converting their multi-cap scheme into another, such as large- and mid-cap. For the present, wait for your fund house to decide which of these courses it will take.