BENGALURU: The Association of Mutual Funds in India (AMFI) has issued an advisory to mutual funds to moderate inflows into small and mid-cap funds in order to protect investors.
SEBI has directed the industry body to communicate to the trustees of MFs that appropriate and proactive measures to be taken by AMCs (asset management companies) and fund managers to protect investors, including but not limited to moderating inflows, portfolio rebalancing etc. “Trustees, in consultation with the Unitholder Protection Committees of the AMCs, shall ensure that a policy is put in place to protect the interests of all investors,” it said.
It added that steps should also be taken to ensure that investors are protected from the first mover advantage of redeeming investors.
“The policy shall be approved by Trustees and should be disclosed on each AMCs’ website within 21 days,” the AMFI said. This advisory comes at a time when small and mid-cap funds have been seeing high inflows. According to AMFI data, small-cap funds witnessed an inflow of Rs 3,257 crore in January, which is a decline from Rs 3,857 crore in the previous month.
Mid-cap funds saw an inflow of Rs 2,061 crore in January. It was Rs 1,393 crore in December 2023. Quarterly inflows into small-cap funds grew 73% in the December quarter to Rs 12,052 crore as against Rs 6,932 crore in March quarter of last year. The inflows into mid-cap funds rose 16% to `6,468 crore in third quarter as against Rs 5,574 crore in the March quarter of last year.