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.
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.
Value fund/ Contra fund*
Large & mid-cap fund
Long duration 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
Medium duration fund
Gilt fund with 10-year constant duration
Medium to long duration fund
Conservative Hybrid fund
Balanced/ Aggressive Hybrid fund*
Dynamic asset allocation or balanced advantage
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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