Introduction of “Flexi Cap Fund” as a new category under Equity Schemes

Last updated: 07 November 2020

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The Securities and Exchange Board of India (SEBI) has introduced a new category of mutual fund schemes called 'Flexi Cap Fund' under the Equity Schemes. This new category aims to provide greater flexibility to fund managers. Flexi Cap Funds are open-ended dynamic equity schemes that can invest across large, mid, and small-cap stocks, with a minimum of 65% of total assets invested in equity and equity-related instruments.

CIRCULAR

SEBI/HO/IMD/DF3/CIR/P/2020/228

November 06, 2020

All Mutual Funds (MFs)/

Asset Management Companies (AMCs)/

Trustee Companies/ Board of Trustees of Mutual Funds/

Association of Mutual Funds in India (AMFI)

Sir / Madam,

Subject: Introduction of “Flexi Cap Fund” as a new category under Equity Schemes

1. SEBI vide circular no. SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06, 2017, has issued guidelines regarding categorization and rationalization of Mutual Fund Schemes.

2. In order to give more flexibility to the mutual funds and taking into account the recommendations of Mutual Fund Advisory Committee (MFAC), a new category named “Flexi Cap Fund” under Equity Schemes will be available with the following scheme characteristics.

Category of Scheme	Scheme Characteristics	Type of scheme (uniform description of scheme)
Flexi Cap Fund	Minimum investment in equity & equity related instruments – 65% of total assets	An open ended dynamic equity scheme investing across large cap, mid cap, small cap stocks

3. The AMC shall ensure that a suitable benchmark is adopted for the Flexi Cap Fund.

4. For easy identification by investors and in order to bring uniformity in names of schemes for a particular category across Mutual Funds, the scheme name shall be the same as the scheme category.

5. Mutual Funds have the option to convert an existing scheme into a Flexi Cap Fund subject to compliance with the requirement for change in fundamental attributes of the scheme in terms of Regulation 18(15A) of SEBI (Mutual Funds) Regulations, 1996.

6. Scheme under the aforesaid mentioned new category can be launched with effect from the date of this circular.

7. This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully,

Bithin Mahanta
General Manager
Tel no.: 022-26449364
Email: bithinm@sebi.gov.in

FAQ :

A Flexi Cap Fund is a new category of open-ended dynamic equity scheme that can invest across large, mid, and small-cap stocks, with at least 65% of its total assets in equity and equity-related instruments.

The Flexi Cap Fund category has been introduced by the Securities and Exchange Board of India (SEBI).

Flexi Cap Funds must invest a minimum of 65% of their total assets in equity and equity-related instruments.

Yes, mutual funds have the option to convert an existing scheme into a Flexi Cap Fund, provided they comply with the requirements for changing fundamental attributes.

New schemes under the Flexi Cap Fund category can be launched with effect from November 6, 2020, the date of the circular.