Understanding SEBI Scheme Categorisation and Rationalisation of Mutual Fund Schemes.
Securities Exchange Board of India (SEBI) on its Circular Dated October 6, 2017 had come up with this circular on Mutual Funds Scheme Categorisation and Rationalisation to have a Uniform Name and Categorisation on the same type of schemes offered by different Asset Management Companies (AMC).
Mutual Funds have close to 1600+ Schemes in different Category of Mutual Funds. It was very confusing for an Investor to Understand the Objective of the Scheme as many Asset Management Companies have multiple schemes with similar objective and Investment Strategy.
In order to Rationalise the Objective and Name of the scheme SEBI has defined Certain terms like what is a Large Cap Fund, Small Cap Fund, Mid Cap Fund, Large and Mid Cap Fund, etc…
Mutual Funds are Broadly Classified into the Following Groups
- Equity Funds
- Debt Funds
- Hybrid Funds
- Solution Oriented Schemes
- Other Schemes
Each Type of Scheme is Further Classified in to the Following.
Equity Funds
- Large Cap Fund
- Small Cap Fund
- Multi Cap Fund
- Mid Cap Fund
- Large & Mid Cap Fund
- Dividend Yield Fund
- Value Fund
- Focused Fund
- Contra Fund
- ELSS / Tax Saver Fund
- Sectorial/Thematic Fund
Debt Funds
- Overnight Fund
- Liquid Fund
- Ultra Short Term Fund
- Low Duration Fund
- Money Market Fund
- Short Duration Fund
- Medium Duration Fund
- Long Duration Fund
- Medium to Long Duration Fund
- Dynamic Bond Fund
- Corporate Bond Fund
- Credit Risk Fund
- Banking and PSU Debt Fund
- Gilt Fund
- Gilt Fund with 10 Year Constant Duration
- Floater Fund
Hybrid Fund
- Conservative Hybrid Fund
- Balanced Hybrid Fund
- Aggressive Hybrid Fund
- Dynamic Asset Allocation Fund
- Multi Asset Allocation Fund
- Arbitrage Fund
- Equity Savings Fund
Solution Oriented Fund
- Retirement Fund
- Children Fund
Other Schemes
- Index Fund/ETF/Gold
- FOF (Overseas or Domestic)
How will it Impact an Investor ?
Since these Changes are Implemented by all the Mutual Fund Companies you will see the Names of the Schemes Changing. Also there are few schemes which are merging with an existing scheme.
Advantages for Investors
- Ease of Choosing Funds
- No Confusing Names in Different AMC
- Uniform Definition for Equity Schemes based on market capitalization by SEBI.
This move by SEBI is a Welcoming move. It helps the Investor to select the funds based on his needs and his risk profile. Similar Schemes in each AMC have been merged.
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