What are the new mutual fund groups and categories according to SEBI? How will this impact your fund choice?

Rationalising and consolidating the mutual funds by Securities and Exchange Board of India (SEBI) is the biggest step taken ever and is extremely beneficial to the investors in picking the right fund. Before that, it had been a complicated thing for the investors to pick a mutual fund from the plethora of existing schemes and New Fund Offers (NFOs) based on his goals.

Bringing uniformity in the characteristics of the similar schemes is now ensuring the investors to evaluate various options available before going for any investment. 

As per SEBI, there are 5 broad mutual fund groups demarcated into a total 36 categories.

1) Equity Schemes (10 categories)
2) Debt schemes (16 categories)
3) Hybrid Schemes (6 categories)
4) Solution Oriented Schemes (2 categories)
5) Other Schemes (2 categories)

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Other than the above groups and categories, mutual fund houses cannot come out with their own methodologies to categorise a scheme.

Now, let's go into the salient features of the major Equity and Hybrid mutual funds groups

Equity Mutual Funds

Hybrid Mutual Funds

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• The mutual fund houses are allowed to designate one scheme per category only.
• Consolidation of the schemes brought more simplification and less confusion among the investors
• Comparision of schemes is now easier due to the availability of less number of schemes.
• A better understanding of the risk potential, return and performance of the funds is possible.
• Due to the presence of 1 scheme per category, there will be a reduction of duplicate schemes.