To make the work of investors easier in respect of selecting the mutual fund scheme, the market watchdog has come out with a plan to categories them into 5 baskets. The step is also likely to do away with the ongoing practice which involves launch of multiple funds based on similar themes.
In a circular, Sebi informed about the categories for classifying the schemes that broadly include equity, debt, hybrid, solution oriented and other scheme. For each of the category only one scheme shall be permitted except for ETFs, index funds, fund of funds with different underlying schemes, thematic or sectoral funds that invest across themes. Further, the market regulator asked fund houses that they ensure that the process does not result in duplication of plans currently on offer.
The regulator also required clear distinction of schemes launched by a mutual fund in respect of investment strategy and asset allocation. For similar schemes launched by different fund houses, SEBI proposed to bring in uniformity.
For the categorization, mutual funds have been allowed a maximum time of two months during which they need to analyse each of their schemes and after obtaining necessary approvals from their trustees need to submit proposal with the SEBI.
With Inputs from PTI