Sebi’s multi-cap norms: robbed of flexibility, funds have been left high and liquidity-dry (2024)

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Investing

Synopsis

Sebi argues multi-cap funds aren’t ‘true to label’, as they don’t serve the stated objective of diversification in its true sense. When a fund starts growing in size, it naturally gravitates towards large-cap stocks. It’s not a deliberate deviation from the objective. The actual problem lies elsewhere. Low liquidity and other risks make fund houses averse to the small-cap universe.

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