This is an impromptu attempt at giving my views on the new rules by SEBI on MultiCap Funds
Youtube Link - https://www.youtube.com/watch?v=euOWL-2v_cU
1) 18-20% of the Total Equity AUM is in Multicap Funds - Suddenly the rules of the game have changed. Will lead to merger and other creative solutions but not mad buying of smallcaps.
2) A little too late -
#FunFact - There are 35 schemes of #MultiCap Fund and 29 of #LargeCap & 27 of #LargeandMidcap Fund. #Multicap AUM = 1.46 lakh cr. #Largecap = 1.48 lakh cr. The regulator has a problem in principle and true to label issues. Why did they not notice till now? Source -AMFI site
3) How does a Fund Manager make Alpha with a Large Book and No Flexibility.
SEBI Rules gives hardly any flexibility to the Fund Manager. Large AUM in a single scheme will make it difficult to move in and out of positions or take a big bet on a sector or smallcap.
Tough for Fund Manager to Outperform. How to justify 0.5-2.5% fees with hardly any Alpha going forward
4) The Big Shift towards ETFs, Direct Equity. Sebi+ Technology
These are my personal views and can be wrong or over-thinking.
Would love the feedback and comments on how to benefit from this trend.
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