SEBI had announced the re-categorisation of various mutual fund type schemes in Oct 2017. This was done to bring consistency as mutual fund houses had launched several mutual fund schemes. As a mutual fund investor you may find investing in a type of mutual fund scheme quite easy after this move, as now investors can put money in mutual fund schemes that match their investment objectives and risk tolerance. Earlier mutual fund investors would find it difficult to select the right mutual fund as asset management companies (AMC) had launched a surplus of similar mutual fund schemes.
SEBI has classified mutual funds into the following types:
A. Equity Funds
SEBI has categorised equity funds into eleven broad types
- Large Cap Fund:
Large cap mutual funds are a type of mutual fund which invests at least 80% of the total assets in equity and equity-related instruments of large-cap companies. - Large & Mid Cap Fund:
Large & mid cap mutual funds are a type of mutual fund which invest 35% of the total assets in equity and equity-related instruments of large-cap companies. Large & mid cap mutual funds also invest 35% of total assets in equity and equity-related instruments of mid-cap firms. - Mid Cap Fund:
Mid cap mutual funds are a type of mutual fund which invest at least 65% of the total assets in equity and equity-related instruments of mid-cap companies. - Small Cap Fund:
Small cap mutual funds are a type of mutual fund which invest at least 65% of the total assets in equity and equity-related instruments of small-cap companies. - Multi Cap Fund:
Multi cap mutual fundsare a type of mutual fund which invests a minimum of 65% of the total assets in equity and equity-related instruments. - Dividend Yield Fund:
Dividend yield mutual funds are a type of mutual fund which invest mainly in dividend-yielding stocks and have a minimum of 65% of the total assets in equity. - Value Fund:
Value cap mutual funds are a type of mutual fund which follows a value investment strategy and has at least 65% of the total assets in equity. - Contra Fund:
Contra mutual funds are a type of mutual fund which follows a contrarian investment strategy and has at least 65% of total assets in equity and equity-related instruments. - Focused Fund:
Focused mutual funds are a type of mutual fund which focuses on a maximum of 30 stocks. It has at least 65% of total assets in equity and equity-related instruments. - Sectoral/Thematic Fund:
Sectorial or Thematic mutual funds are a type of mutual fund which invests a minimum of 80% of total assets in equity and equity-related instruments of a particular sector or a particular theme. - ELSS:
ELSS mutual funds are a type of mutual fund which invest a minimum of 80% of total assets in equity and equity-related instruments (In accordance with Equity Linked Saving Scheme, 2005 notified by the Ministry of Finance).
A Large Cap is defined as the first hundred companies based on market capitalisation.
A Mid Cap is defined as companies from 101st to 250th company in terms of market capitalisation.
A Small Cap is 250th Company onwards based on market capitalisation.
A fund house may offer either a value fund or a contra fund.
B. Debt Funds
SEBI has categorised debt funds into sixteen broad types.
- Overnight Fund:
Overnight mutual funds are a type of mutual fund which invest in overnight securities with maturity of one day. - Liquid Fund:
Liquid mutual funds are a type of mutual fund which invest in debt and money market securities with a maturity of up to 91 days. - Ultra-Short Duration Fund:
Ultra short duration mutual funds are a type of mutual fund which invests in debt and money market instruments where the duration of the portfolio is between three months to six months. - Low Duration Fund:
Low duration mutual funds are a type of mutual fund which invests in debt and money market instruments where the duration of the portfolio is between six months to twelve months. - Money Market Fund:
Money Market mutual funds are a type of mutual fund which invests in money market instruments with a maturity of up to one year. - Short Duration Fund:
Short duration mutual funds are a type of mutual fund which invests in debt and money market instruments where the duration of the portfolio is between one year to three years. - Medium Duration Fund:
Medium duration mutual funds are a type of mutual fund which invests in debt and money market instruments where the duration of the portfolio is between three years to four years. - Medium to Long Duration Fund:
Medium to Long duration mutual funds are a type of mutual fund which invests in debt and money market instruments where the duration of the portfolio is between four years to seven years. - Long Duration Fund:
Long duration mutual funds are a type of mutual fund which invests in debt and money market instruments where the duration of the portfolio is above seven years. - Dynamic Fund:
Dynamic mutual funds are a type of mutual fund which invest across multiple durations. - Corporate Bond Fund:
Corporate bond mutual funds are a type of mutual fund which invest at least 80% of the total assets in corporate bonds of the highest rating. - Credit Risk Fund:
Credit risk mutual funds are a type of mutual fund which invests at least 65% of total assets in corporate bonds (Investment in below rated highest instruments). - Banking and PSU Fund:
Banking and PSU mutual funds are a type of mutual fund which invest a minimum of 80% of total assets in debt instruments of banks, PSUs and Public Financial Institutions. - Gilt Fund:
Gilt mutual funds are a type of mutual fund which invests a minimum of 80% of total assets in G-secs across maturity. - Gilt Fund with 10-year constant duration:
Gilt mutual funds are a type of mutual fund with 10 year constant duration invest a minimum of 80% of total assets in G-Secs where the duration of the portfolio is ten years. - Floater Fund:
Floater mutual funds are a type of mutual fund which invests a minimum of 65% of total assets in floating rate instruments.
C. Hybrid Funds
SEBI has categorised hybrid funds into seven broad types.
- Conservative Hybrid Fund:
Conservative hybrid mutual funds are a type of mutual fund which invest between 10% and 25% of the total assets in equity and equity-related instruments. The Conservative hybrid mutual fund invests between 75% to 90% of the total assets in debt instruments. - Balanced Hybrid Fund:
Balanced mutual funds are a type of mutual fund which invest between 40% and 60% of the total assets in equity and equity-related instruments. The Balanced mutual fund type of mutual fund invests between 40% to 60% of the total assets in debt instruments. No arbitrage is allowed in this type of mutual fund scheme. - Aggressive Hybrid Fund:
Aggressive hybrid mutual funds are a type of mutual fund which invests between 65% and 80% of the total assets in equity and equity-related instruments. The Aggressive hybrid mutual fund invests between 20% to 35% of the total assets in debt instruments. - Dynamic Asset Allocation or Balanced Advantage:
Dynamic asset allocation or balanced advantage mutual funds are a type of mutual fund which invests in equity or debt that is managed dynamically. - Multi-Asset Allocation:
Multi asset allocation duration mutual funds are a type of mutual fund which invest in a minimum of three asset classes with an allocation of at least 10% each in all three asset classes. - Arbitrage Fund:
Arbitrage mutual funds are a type of mutual fund which invests a minimum of 65% of total assets in equity and equity-related instruments. Arbitrage hybrid mutual funds type of mutual fund scheme follows an arbitrage strategy. - Equity Savings:
Equity saving mutual funds are a type of mutual fund which invests a minimum of 65% of total assets in equity and equity-related instruments. Equity saving mutual funds invests a minimum of 10% of total assets in debt instruments. The minimum hedged and unhedged may be stated in the Scheme information document ( SID ).
Mutual Funds may offer either an aggressive hybrid fund or balanced fund. Also note that foreign securities can not be treated as a separate asset class.
D. Solution-oriented mutual fund schemes
- Retirement Fund:
Retirement fund solution oriented mutual fund schemes are a type of mutual fund which have a lock-in of at least five years or till the retirement age, whichever is earlier. - Children’s Fund:
Childrens fund solution oriented mutual fund scheme are a type of mutual fund which would have a lock-in of at least five years or till the child attains majority age whichever comes earlier.
E. Other Schemes
- Index Funds/ETFs:
Index mutual funds or ETFs are a type of mutual fund which would invest at least 95% of total assets in securities of a particular national stock exchange index. - FoFs (Domestic/Overseas):
FoFs schemes are a type of mutual fund which invest a minimum of 95% of total assets in the underlying fund.
