Why the small-cap party’s over for some MFs

SEBI’s insistence on investor protection will require restricting inflows and rejigging portfolios—easier said than done for some fund houses riding the wave.

The Securities and Exchange Board of India seems to be prepping the market for bad news. 

Last week, it issued directions to mutual funds to put in place mechanisms to protect the interests of those investing in small- and mid-cap funds amid a build-up of “froth” in the space. In other words, in the event of a market downturn and a resultant surge in outflows from such funds, it wants to ensure that there is enough liquidity to sustain redemptions by investors.

Acting on the directions, the Association of Mutual Funds in India urged trustees of mutual funds to …


Furquan Moharkan

Furquan leads the banking coverage at The Morning Context. A business journalist with eight years of experience and a best-selling author, in his earlier stints as a reporter with the Deccan Herald and a columnist at The Banker, he wrote on banking, financial markets and regulatory affairs. He has extensively covered India's debt market crisis, banking crisis and the fall of Yes Bank.

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