Archive / Investment Adviser (Level 1) / Mutual Funds
nism-series-xa-sebi-large-cap-fund-minimum-allocation[ INVESTMENT ADVISER (LEVEL 1) ]
As per SEBI's mutual fund scheme categorization norms, a 'Large Cap Fund' is required to invest what minimum percentage of its total assets in large-cap company stocks (the 1st to 100th company by full market capitalization)?
[ A ]80% of total assets[ CORRECT ]
[ B ]65% of total assets
[ C ]35% of total assets
[ D ]100% of total assets
Takeaway
Option A is correct: 80% of total assets.
Derivation
Under SEBI's October 2017 mutual fund scheme categorization circular, a 'Large Cap Fund' must invest a minimum of 80% of its total assets in large-cap stocks — defined as the 1st to 100th company by full market capitalization, as published periodically by AMFI. This is the highest single-category concentration mandate among the equity categories, reflecting the fund's stated mandate to track large, established companies. Candidates often confuse this with the 65% threshold that applies to Mid Cap and Small Cap Funds, or the 35%-per-sleeve threshold that applies to each sleeve of the separate Large & Mid Cap Fund equity category.
Why the others fail
B — 65% of total assets
65% is the minimum a Mid Cap Fund must allocate to mid-cap stocks, or a Small Cap Fund to small-cap stocks — not the Large Cap Fund category this question asks about.
C — 35% of total assets
35% is the minimum allocation SEBI requires from a Large & Mid Cap Fund in each of its two sleeves (large-cap and mid-cap), not the dedicated Large Cap Fund category.
D — 100% of total assets
SEBI's categorization sets a minimum threshold, not a full-allocation mandate — a Large Cap Fund may hold the remainder in other permitted instruments.