All the scheme launched by Mutual Funds should be similar; with having standard characteristics in each category. It will help the investors of Mutual Fund to evaluate the different options available before taking a decision.

In order to bring the uniformity in the practice, across mutual Funds and to standardize the scheme categories and characteristics of each category, the issue was discussed in Mutual Fund Advisory Committee (MFAC). Accordingly, it has been decided to categorize the Mutual Fund schemes as given below.

  • Equity Scheme
  • Debt Schemes
  • Hybrid Scheme
  • Solution Oriented Schemes
  • Other Schemes

Large Cap, Mid Cap and Small Cap

  • Large Cap-1st to 100th company in terms of  full market capitalization.
  • Mid Cap-101st to 250th company in terms of full market capitalization.
  • Small Cap-251th company on wards in terms of full market capitalization

Market Capitalization :

If a stock is  listed on more than one recognized stock exchange, an average of full market capitalization of the stock on all such stock exchanges, will be computed.

In case a stock is  listed on only one recognized stock exchange, the full market capitalization of that stock on  such stock exchanges, will be considered.

The list would be uploaded on the AMFI website and the same would be updated every six months based on the data as on the end of  June and December of each year. The data shall be available on the AMFI  website within 5 calendar days from the end of the 6 months period.

Subsequently to any updation in the list, Mutual Funds would have to re balance their portfolio  (if required ) in line with updated list , within a period of one month.

Process to be followed for Categorization and rationalization of Schemes

1. Only one scheme per category would be permitted except

  • Index Funds / ETFs replicating /tracking different indices.
  • Fund of funds having different underlying schemes
  • Sectoral /thematic funds investing in different sectors/ themes.

2. Mutual funds would be required to analyze each of their existing schemes in light of the list of categories stated herein and submit the proposal to SEBI within 2 months from the date of this circular ( 06-10-2017).

3. As per the SEBI’s observation to the proposal , Mutual Funds would have to carry necessary changes within a period of 3 months from the date of observations.

The details of Scheme of Mutual Funds are as below:

A. Equity Scheme

Sr. No Category of Scheme Scheme Characteristics
1 Multi Cap Fund Minimum Investment in equity and Equity related instruments -65% of total assets.
2 Large Cap Fund Minimum investment in Equity and equity related instruments of large companies -80% of total assets
3 Large cap and Mid cap Fund Minimum investment in Equity and equity related instruments of large companies -35% of total assets.

Minimum investment in Equity and equity related instruments of mid cap stocks  -35% of total assets

4 Mid Cap Fund Minimum investment in Equity and equity related instruments of Mid cap companies -65% of total assets
5 Small Cap Fund Minimum investment in Equity and equity related instruments of Small  cap companies -65% of total assets
6 Dividend yield Fund Scheme should predominantly invest in  dividend yielding stocks.

Minimum investment in equity -65% of total assets

7 Value Fund Scheme should follow a value investment strategy.

Minimum investment in equity and equity related instruments- 65% of total assets

Contra Fund Scheme should follow a value investment strategy.

Minimum investment in equity and equity related instruments -65% of total assets

8 Focused Fund A scheme focused on the number of stocks ( maximum 30 )

Minimum investment in equity and equity related instruments -65% of total assets

9 Sectoral / Thematic Minimum investment in equity and equity related instruments of a particular sector / particular theme  -80% of total assets
10 ELSS Minimum investment in equity and equity related instruments -80% of total assets ( in accordance with Equity Linked Saving  Scheme, 2005 notified by Ministry of Finance )

B. Debt Scheme:

Sr. No Category of Scheme Scheme Characteristics
1 Overnight Fund Investment in overnight securities having maturity of 1 day
2 Liquid  Fund Investment in Debt and money market securities with maturity of up to 91 days only.
3 Ultra Short Duration Fund Investment in Debt and Money Market instruments such that the Macaulay duration of the portfolio is between 3 months to 6 months
4 Low Duration Fund Investment in Debt and Money Market instruments such that the Macaulay duration of the portfolio is between 6 months to 12 months
5 Money Market Fund Investment in money market instruments having maturity  up to 1 year
6 Short Duration Fund Investment in Debt and Money Market instruments such that the Macaulay duration of the portfolio is between  1 years  to 3 years .
7 Medium Duration Fund Investment in Debt and Money Market instruments such that the Macaulay duration of the portfolio is between  3 years  to 4 years .
8 Medium to long Duration Fund Investment in Debt and Money Market instruments such that the Macaulay duration of the portfolio is between  4 years  to 7 years .
9 Long Duration Fund Investment in Debt and Money Market instruments such that the Macaulay duration of the portfolio is greater than 7 years .
10 Dynamic Bond Investment across duration
11 Corporate Bond Fund Minimum investment in corporate bonds -80% of total assets( only in highest rated instruments)
12 Credit Risk Fund Minimum investment in corporate bonds -65% of total assets( Investment in below highest rated instruments)
13 Banking and PSU Fund Minimum investment in Debt instruments  of banks, Public sector undertakings, public financial institutions- 80% of total assets.
14 Glit Fund Minimum investment in G secs- 80% of total assets ( across maturity )
15 Glit fund with 10 year constant duration Minimum investment in G secs- 80% of total assets  such  that Macaulay duration of the portfolio is  equal to 10 years
16 Floater Fund Minimum investment in floating rate  instruments – 65% of total assets

C. Hybrid Scheme

Sr. No Category of Scheme Scheme Characteristics
1 Conservative Hybrid Scheme Investment in equity and equity related instruments between -10% and 25% of total assets.

Investment in Debt instruments between -75% and 90% of total assets

2 Balance Hybrid Fund Equity and equity related instruments between -40% and 60% of total assets.

Debt instruments between -40% and 60% of total assets.

No arbitrage would be permitted in this scheme

Aggressive Hybrid Fund Equity and equity related instruments between -65% and 80% of total assets.

Debt instruments between -20% and 35% of total assets.

3 Dynamic asset allocation or balanced advantage Investment in equity  / debt that is managed dynamically.
4 Multi asset allocation Invests in at least three asset classes with a minimum allocation of at least  10% each in all three asset classes.
5 Arbitrage Fund Scheme following arbitrage strategy. Minimum investment in equity and equity related instruments- 65% of total assets
6 Equity Savings Minimum investment  in equity and equity related instruments- 65% of total  assets and minimum investment in debt -10% of total assets

 

Minimum hedged and un hedged to be stated  in the SID.

Asset allocation under defensive considerations may also be stated in the offer document.

D. Solutions Oriented Scheme

Sr. No Category of Scheme Scheme Characteristics
1 Retirement Fund Scheme having a lock in  for at least 5 years or till retirement age whichever is earlier.
2 Children’s Fund Scheme having a lock in  for at least 5 years or till the child attains age of majority whichever is earlier.

E. Other Schemes

Sr. No Category of Scheme Scheme Characteristics
1 Index Funds/ ETFs Minimum investment in securities of a particular index (which is being replicated / tracked ) -95% of total assets.
2 FoFs ( Overseas / Domestics) Minimum Investment in the underlying fund -95% of total assets

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