Categorisation of Mutual Funds

SEBI Circular on Categorisation and Rationalisation of Mutual fund schemes, 2017

SEBI has categorized all Mutual funds in 5 Broad categories:

• Equity Schemes (11 sub-categories)
• Debt Schemes (16 sub-categories)
• Hybrid Schemes (6 sub-categories)
• Solution Oriented Schemes (2 sub-categories)
• Other Schemes (2 sub-categories)

Equity Schemes (11 schemes)

Multi Cap Funds	Min 25% in Large Cap companies (1 – 100th company)Min 25% in Mid Cap companies (101st – 250th company)Min 25% in Small Cap companies (251st company onwards)
Large Cap Funds	Min 80% in Large cap companies
Large & Mid Cap	Min 35% in Large + Min 35% in Mid
Mid Cap Funds	Min 65% in Mid Cap
Small Cap Funds	Min 65% in Small Cap
Dividend Yield Funds	Min 65% in equity + Majority in dividend yielding stocks
Value Stocks or Contra Fund	Min 65% in equity stocksValue fund = Value Investment StrategyContra fund = Contrarian Investment Strategy
Focussed Fund	Maximum 30 Stocks + Min 65% in equity
Sectoral/Thematic	Min 80% in equity of a particular sector
ELSS	Statutory lock-in of 3 years and tax benefitsMin 80% investment in equity
Flexi-Cap	Min 65% investment in equityVaried investment across large, mid and small cap stocks

Debt Schemes (16 schemes)

All of the below debt schemes are Open-ended

Overnight Fund	Overnight securities having maturity of 1 day
Liquid Fund	Debt and money market securities having maturity of 91 days (T-bills, bank bonds, etc.)
Ultra short duration Fund	Debt and money market securities with Macaulay duration of portfolio between 3 to 6 months  Macaulay formula = Wtd avg time to receive a bond’s cash flows C = Coupon rate M = Maturity value
Low duration Fund	Debt and money market securities with Macaulay duration of portfolio between 6 months to 1 year
Money Market Fund	Money market instruments with maturity up to 1 year
Short Duration Fund	Debt and money market securities with Macaulay duration of portfolio between 1 to 3 years
Medium Duration Fund	Debt and money market securities with Macaulay duration of portfolio between 3 to 4 years
Medium to Long Duration fund	Debt and money market securities with Macaulay duration of portfolio between 4 to 7 years
Long Duration fund	Debt and money market securities with Macaulay duration of portfolio more than 7 years
Dynamic bond	Investing across durations
Corporate Bond Fund	Min 80% investment in AA+ and above rated corporate bonds
Credit Risk Fund	Min 65% investment in AA and below rated corporate bonds
Banking & PSU Fund	Min 80% investment in Bank and PSU debt instruments
Gilt Fund	Min 80% investment in G Secs across maturity
Gilt Fund with 10 yr	Min 80% investment in G Secs so that Macaulay duration of portfolio is 10 years
Floater Fund	Min 65% investment in floating rate instruments

Hybrid Schemes (6 schemes)

Conservative Hybrid Fund	75-90% in debt instruments10-25% in equity and equity instruments
Balanced Hybrid Fund	40-60% in equity and equity related instruments40-60% in debt instrumentsNo arbitrage permitted
Aggressive Hybrid Fund	65-80% in equity and equity related instruments20-35% in debt instrumentsNote: Mutual funds in India can offer either Aggressive Hybrid Fund OR Balanced Fund
Dynamic Asset Allocation/ Balanced Advantage	Investment in equity/debt managed dynamically
Multi Asset Allocation	Invests in at least 3 asset classesMinimum 10% allocation in each asset classForeign securities not treated as separate asset class
Arbitrage Fund	Minimum 65% in equityInvests in arbitrage opportunities
Equity Savings	Minimum 65% in equityMinimum 10% in debtInvests in equity, arbitrage and debt

Solution-Oriented Schemes (2 schemes)

Retirement Fund	Lock-in of 5 years or till retirement (whichever is earlier)For long-term retirement corpus planning
Children’s Fund	Lock-in of 5 years or till child’s majority (earlier of two)For building corpus for child’s future needs

Other Schemes (9 schemes)

Index Funds/ETFs	Minimum 95% in securities of a specific index being tracked
Fund of Funds (Overseas/ Domestic)	Minimum 95% in underlying fund
Fixed Maturity Plans	Close-ended debt fundsPortfolio duration aligned with scheme maturity
Target Maturity Date Funds (TMF)	Debt funds with specific maturity dates (2-10 years)Invest in bonds with matching maturities
Capital Protection Oriented Funds	Closed-end hybrid fundsPart investment in debt instruments for capital protectionRemaining in equity derivatives for higher returns
Infrastructure Debt Funds	Minimum 90% in debt securities of infrastructure companies/projectsCan be set up as Trust (regulated by SEBI) or Company (regulated by RBI)
Real Estate Mutual Fund	Minimum 75% in real estate assets, mortgage-backed securities, equity sharesAt least 35% in physical assetsClosed-end and listed on stock exchange
ESG Funds	Sub-category under thematic equity schemesVarious strategies: Exclusion, Integration, Best-in-class, Impact investing, etc.
Specialized Investment Fund (SIF)	Minimum investment amount: Rs. 10 lakhs

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always consult with a qualified financial advisor before making investment decisions.