SEBI Definition of Largecap, Midcap, Smallcap is not what we Think

SEBI Multicap Regulation is a Good Move as it Restores the Interests of Investor! NEWS LINK

What is Multicap?

Multicap Funds are those Hybrid Funds containing Largecap, Midcap & Smcallcap stocks in portfolio.

Why the Regulation?

There were multiple fund managers who call their fund as Multicap but was mostly investing in Largecaps. This made the Investors feel cheated.

What is the New Regulation?

SEBI mandates there If the Fund is Multicap then it should contain 25% allocation on Largecap, 25% allocation on Midcap, 25% allocation on Smallcap.

The re-balancing has to be done before Feb 2021.

Will this help us who invest in Smallcaps?

Yes as the re-balancing Corpus is expected to be around Rs. 40000 Crore

But not definitely the Amplitude of what most people think off.

SEBI Definitions of Largecap, Midcap & Smallcap are slight different:

  • Largecap top 100 companies by Capitalization
  • Midcap next 150 companies by Capitalization
  • Smallcap remaining companies after the above 250

One Sample Link

The Twist

So this means most of our stocks will enter ONLY the Smallcap segment as they are in the remaining 250 category. (NOT both of Smallcap & Midcap)

What we can Do?

What we can do is continue focusing on good multibaggers, let the companies perform well, let EPS growth lead to market price growth & if lucky Multicap Funds will pick it and provide another easy 10X ride!

NEW Smallcap Multibaggers

We have compiled a list of 5 Smallcap Multibaggers which is anticipated to benefit from the Bull Run. Premium Members will get it free.

Published by Futurecaps Advisor

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