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.
|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|
|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.