MUMBAI: Referring to a speculative report in a section of the media about AMFI /AMCs proposing to SEBI to launch a new benchmark index, the Association of Mutual Funds in India, (AMFI) has clarified that it has not written to SEBI proposing the launch of new index nor capping any stock in the Index.
The industry will continue to adhere to SEBI guidance on the capping of a single stock.
Suffice to say, whenever any Mutual Fund launches a scheme, the fund house chooses an appropriate benchmark index which reflects the composition of the scheme’s portfolio.
Undoubtedly there are challenges in performance measurement as indices do not have a cap on stock whereas mutual fund schemes have a cap of 10 % on a stock. However, this issue needs to be settled between Fund Houses and index calculating agencies. Globally, index calculating agencies do prepare customized indices which comply with investment restrictions of the fund.
AMFI requests media houses to not publish such unverified news as this can lead to unhealthy market speculation.