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

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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.

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
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
Conservative Hybrid fund Multi-asset allocation
Balanced/ Aggressive Hybrid fund* Arbitrage fund
Dynamic asset allocation or balanced advantage Equity savings
Retirement fund Children's fund
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.

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