*SEBI ON SMALL AND MIDCAP*
Many small-cap and mid-cap funds may restrict SIP and lumpsum investments.
They may also limit how much you can withdraw.
Reason for all this?
SEBI wants fund houses to stay alert amid crazy inflows to small-cap schemes.
What exactly has happened?
SEBI has acknowledged that there's froth building up in the mid and small-cap space.
So, it has asked all fund houses to develop policies in the next 21 days to protect investors.
Here are some proactive steps that SEBI has suggested.
1. MODERATE INFLOWS
SEBI has asked fund houses to limit inflows into their schemes.
There are many ways to do it.
Fund houses can cap how much you can invest through SIP or lumpsum.
They can also stop taking fresh inflows.
Depending on the size of a scheme, you will see different fund houses taking different approaches.
In the past, many fund houses have done it.
Examples include SBI Small Cap, Mirae Asset Emerging Bluechip, etc.
2. REBALANCE PORTFOLIOS
SEBI has asked fund houses to “rebalance” their portfolios to ensure investors don’t see the ugly side of redemption pressure.
So, schemes may increase exposure to large-cap stocks and maintain higher cash to meet redemption requests.
3. PROTECT INVESTORS FROM EARLY REDEMPTIONS
In a market downturn, if too many investors start to redeem their investments, it may force fund managers to sell investments in distress.
And it can impact other investors.
So, SEBI wants fund houses to avoid such situations.
What can fund houses do?
They may limit how much one can redeem during a specific period.
This will ensure there’s no sudden mad rush to withdraw.
Of course, different fund houses will come up with different approaches.
By: via AlliesFinServe #StockMarket #Bharat Telegram.me/AlliesFin
