TV9
user profile
Sign In

By signing in or creating an account, you agree with Associated Broadcasting Company's Terms & Conditions and Privacy Policy.

Subscribe Whatsapp Channel
Bihar 2025 India Sports Tech World Business Career Religion Entertainment LifeStyle Photos Shorts Education Science Cities Videos

SEBI proposes Mutual Fund scheme categorisation

SEBI's proposed changes aim to clarify mutual fund categorization and address portfolio overlap. New limits on portfolio similarity (no more than 50% overlap) are proposed, with strict timelines for rebalancing. Investors will have exit options if deviations persist. The regulator also suggests renaming "funds" to "schemes" and allowing sectoral debt funds.

New Nomenclature and Categorization of Mutual Fund Schemes
New Nomenclature and Categorization of Mutual Fund Schemes Credit: Ashish Vaishnav/SOPA Images/LightRocket via Getty Images
| Updated on: Jul 19, 2025 | 05:59 PM

New Delhi: SEBI has proposed to categorize the mutual fund schemes in order to improve clarity and address the issue of overlapping in the portfolio of the scheme.

SEBI observed that there were some significant coincidences of portfolios in some schemes and felt it necessary to introduce clear limits to the industry to avoid recurrence of schemes with the same portfolios.

Also Read
SEBI to Drop "Penalty" Term for Brokers and their business to avoid stigma
SEBI plans dropping word "Penalty" in action against brokers to avoid stigma
SEBI Study: Rs 1 Lakh crore worth of loss for individual Futures and Options traders in FY25
91% of individual traders lost money in F&O trading in FY25: SEBI study
While Sebi has proposed a change in the base price and method of valuation of gold and silver ETFs, the national secretary at the India Bullion and Jewellers Association thinks that there might be problem with the suggested model. (Picture Credit: depositphotos)
Gold, silver ETF: Sebi in favour of standardising valuations on domestic prices; floats paper

In the paper, SEBI opined that mutual fund should be allowed to offer both the Contra Fund and Value Fund, subject to the condition that no more than 50 percent of the schemes portfolios would overlap at any given point of time

The condition for overlapping should be monitored at the new issue of NFO (New Fund Offer).

Just in case of higher than permitted overlap, the Asset Management Company (AMC) should and must rebalance the portfolios within 30 days. A further extension of 30 days could be obtained from the Investors Committee of the fund house, provided with the reasons for the said extension.

"If the deviation persists beyond this period, investors of both the schemes shall be given an exit option without any exit load," Sebi said.

The market regulator further floated that fund houses are to be allowed to launch a sectoral debt fund.The proposed move is expected to ensure the sufficient availability of investment-grade papers within the chosen sectors.

Additionally, the scheme offers different lock-in periods, such as 3 years, 5 years, or 10 years, tailored for investor's different needs.

SEBI also proposed to change the nomenclature, suggesting the word scheme is used instead of fund as it creates the confusion. For example, instead of calling a "Large Cap Fund," it should be called "Large Cap Scheme."

All in all, mutual fund houses would continue to be clubbed under five broad categories—equity-oriented scheme, debt-oriented scheme, hybrid scheme, solution-oriented scheme, and others.

The Securities and Exchange Board of India (Sebi) has sought public comments till August 8 on the proposals.

{{ articles_filter_432_widget.title }}