List of all Mutual Funds Categories

SEBI’s Categorisation of Mutual Fund Schemes

The Securities and Exchange Board of India (SEBI) is the market regulator of India's securities market. In a 2017 circular on mutual fund categorisation, SEBI classified all current and upcoming mutual fund schemes into five main groups: equity funds, debt funds, hybrid funds, solution-oriented funds, and other funds, including ETFs and FOFs. These groups are further divided into 39 mutual fund scheme categories available in the market.

Reasons Behind the Mutual Fund Recategorisation

SEBI aims to standardise the functioning of Asset Management Companies (AMCs) by introducing mutual fund categorisation rules. The move seeks to eliminate confusion caused by misleading scheme names. The new regulations require AMCs to define names clearly based on fund objectives and asset allocation. This ensures transparency for investors, facilitating easier product comparison and selection. Additionally, the rules establish a framework for fund managers to maintain focus on specific objectives, discouraging frequent changes.

What Are the Rules for Mutual Fund Recategorisation?

SEBI has implemented changes in mutual fund categorisation to provide investors with clearer options. The new rules include:

• Enhanced Classification: SEBI now clearly defines asset allocation, investment mandate, and risk profiles for mutual fund schemes. Categories include Equity, Debt, Hybrid, Solution Oriented, and Others.
• Scheme Renaming: Schemes must be renamed to reflect their risk profiles, removing misleading adjectives like "opportunity" or "advantage" that may attract investors without a thorough risk analysis.
• Introduction of Lock-in Period: Certain solution-oriented schemes, like retirement and children's funds, may have a lock-in period introduced by SEBI to align with their objectives. Existing investors may not be affected by this change.
• Changes to Scheme Attributes: Fund houses are mandated to redefine the investment mandate, strategy, and benchmark against which fund performance will be evaluated.

These new SEBI rules necessitate Asset Management Companies (AMCs) to realign their offerings in line with the updated norms, providing investors with increased transparency and clarity.

Equity Schemes

Equity schemes are divided into 12 different categories, primarily investing in stocks. Large, mid and small-cap stocks define the investment universe based on the scheme's mandate. The equity funds can be further expanded on the basis of the sector/theme and investing strategy of the fund.

Debt Schemes

Debt schemes offer 16 categories: investing in the money market or debt securities. Money market securities include commercial papers, certificates of deposits, and treasury bills, while debt market securities include government securities, PSU bonds, and non-convertible debts. Sub-categories are based on the nature of investments and their maturity period.

Hybrid Schemes

Hybrid schemes are a blend of equity and debt funds. Hybrid schemes have seven categories to invest in. Aggressive Hybrid Funds have the highest exposure to equities, while debt-oriented hybrid funds (Conservative Hybrid Funds) have the least exposure to debt instruments. Know more about the structure of Hybrid schemes in the table listed below.

Solution-oriented Schemes

Solutions-oriented schemes include Retirement Funds and Children’s Funds. These are open-ended funds with a minimum lock-in period of 5 years or until retirement age (for Retirement Funds) and/or until the child reaches the age of majority (for Children’s Funds).

Other Schemes

Other Schemes consist of two sub-categories – Index Funds/ETFs and Fund of Funds (FoFs). Index Funds/ETFs invest 95% of the assets in securities of a specific index. Fund of Funds also invests a minimum of 95% in underlying funds. FoFs are of two types – Domestic and Overseas.

Equity Scheme Categories

Scheme Category	Key Features
Large-cap Fund	Invest 80% in large-cap firms' equity and related securities
Mid-cap Fund	Invest 65% in mid-cap firms' equity and related securities
Small-cap Fund	Invest 65% in small-cap firms' equity and related securities
Multi-cap Fund*	Invest 65% in equity and related securities across market caps
Large and Mid-cap Fund	Invest 35% in large-cap and 35% in mid-cap firms' equity
Flexi Cap Fund	Invest in equity across all market capitalisations
Dividend Yield Fund	Majorly invest in dividend-yielding stocks and at least 65% in equity
Value Fund	Follow a value investment strategy, investing 65% in equity
Contra Fund	Follow a contrarian strategy, investing 65% in equity
Sectoral/Thematic Fund	Invest at least 80% in a specific theme or sector
Focused Fund	Invest 65% in equity, focusing on a maximum of 30 stocks
ELSS (Equity Linked Savings Scheme)	Invest 80% in equity and related securities

Note: Multi-cap Fund is also referred to as Diversified Equity Funds.

Debt Scheme Categories

Scheme Category	Key Features
Low-duration Fund	Invests in money market and debt securities with a portfolio Macaulay duration of 6 to 12 months.
Ultra-short Duration Fund	Invests in money market and debt securities with a portfolio Macaulay duration of 3 to 6 months.
Liquid Fund	Invests in money market and debt securities with a maturity of up to 91 days only.
Overnight Fund	Invests in overnight securities with a 1-day maturity.
Short-duration Fund	Invests in money market and debt securities with a portfolio Macaulay duration of 1 to 3 years.
Medium Duration Fund	Invests in money market and debt securities with a portfolio Macaulay duration of 3 to 4 years.
Money Market Fund	Invests in money market securities with a maturity of up to 1 year.
Medium- to Long-duration Fund	Invests in money market and debt securities with a portfolio Macaulay duration of 4 to 7 years.
Long-duration Fund	Invests in money market and debt securities with a portfolio Macaulay duration of more than seven years.
Corporate Bond Fund	Invests 80% of its total assets in the highest-rated corporate bonds.
Dynamic Bond Fund	Invests across different durations.
Banking & PSU Fund	Invests 80% of total assets in debt securities of banks, public sector undertakings, and public financial institutions.
Credit Risk Fund	Invests 65% of total assets in corporate bonds with an AA rating or lower.
Floater Fund	Invests 65% of total assets in floating rate instruments
Gilt Fund	Invests 80% of total assets in government securities.
Gilt Fund with 10-year Constant Duration	Invests 80% of total assets in government securities, maintaining a constant portfolio Macaulay duration of 10 years.

Hybrid Scheme Categories

Scheme Category	Key Features
Balanced Hybrid Fund	Invests 40-60% in equity and related securities; 40-60% in debt securities. No arbitrage allowed.
Aggressive Hybrid Fund	Allocates 65-80% in equity and related securities; and 20-35% in debt securities.
Conservative Hybrid Fund	Invests 10-25% in equity and related securities; 75-90% in debt securities.
Dynamic Asset Allocation/Balanced Advantage Fund	Flexible management of equity and debt securities.
Multi-Asset Allocation Fund	Invests in a minimum of three asset classes, with a minimum 10% allocation in each.
Equity Savings	Puts at least 65% in equity and 10% in debt securities.
Arbitrage Fund	Follows an arbitrage strategy, with at least 65% in equity and related securities.

Solution-oriented Schemes Categories

Scheme Category	Key Features
Children’s Fund	Lock-in period: Minimum 5 years or until the child reaches majority age, whichever is earlier.
Retirement Fund	Lock-in period: Minimum 5 years or until retirement age, whichever is earlier.

Other Schemes Categories

Scheme Category	Key Features
Index Funds/ETFs	Mirrors performance of the underlying market index
Fund of Funds	Allocates at least 95% of assets into underlying funds