The Securities and Exchange Board of India (Sebi) has asked trustees of mutual funds to establish a framework aimed at safeguarding interests of investors in small and midcap schemes.
The regulator has, in a communication sent to Association of Mutual Funds in India (AMFI) on Tuesday evening, asked fund houses to list the steps they are taking to protect investors in such schemes in next 21 days, said two people in the know.
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Small-cap and midcap counters faced the brunt of the sell-off, on reports that a concerned market regulator had called for stress tests of mutual funds small cap schemes
"Few stocks in the small- and mid-cap segment have multiplied, and strong momentum is taking them beyond the fair value of businesses," said Kotak in a letter to investors. "We believe our funds are positioned defensively, emphasising the quality of businesses. However, given the market background, we see it prudent to limit the inflows in our Small Cap Fund at this juncture."