Mutual Funds Schemes Reclassified as per New Rules to Help Investors Choose & Compare Funds

By Olga Robert
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    The Securities and Exchange Board of India (SEBI) has introduced a new system of fund classification to categorize mutual fund schemes to make decision making easier for consumers. The asset managers will now have to reclassify their product offerings according to the new directives.

    Mutual Funds Schemes to Be Reclassified as per New Rules

    The new classification will simplify and bring uniformity among the different types of funds. There are an estimated 837 open-ended schemes for the investors to choose from India. The new reclassification is aimed to avoid duplication and confusion. A fund house can offer 10 types of equity funds, 16 categories of bond schemes and 6 hybrid funds.

    EQUITY  
    Multi-cap fund  Dividend-yield fund
    Large-cap fund  Value fund/ Contra fund*
    Large & mid-cap fund  Focused fund
    Mid-cap fund  Sectoral/thematic fund
    Small-cap fund  ELSS
    DEBT  
    Overnight fund  Long duration fund
    Liquid fund  Dynamic bond fund
    Ultra short-duration fund  Corporate bond fund
    Low duration fund  Credit risk fund
    Money market fund  Banking and PSU fund
    Short duration fund  Gilt fund
    Medium duration fund  Gilt fund with 10-year constant duration
    Medium to long duration fund  Floater fund
    HYBRID  
    Conservative Hybrid fund  Multi-asset allocation
    Balanced/ Aggressive Hybrid fund*  Arbitrage fund
    Dynamic asset allocation or balanced advantage  Equity savings
    SOLUTION ORIENTED  
    Retirement fund  Children's fund
    OTHERS  
    Index funds/ ETFs  Fund of funds (Overseas/ domestic)

    Fund houses have begun recategorizing their schemes. Some schemes will now be merged or renamed as per the new norms. Investors will also have to review and reallocate their funds as per their needs.

    Read more about: mutual funds
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