by Dileep Ramachandran, Mutual Funds
06 Jun , 2018

New Debt Mutual Fund Classification by SEBI

       New Debt Mutual Fund Classification by SEBI

On October 2017, Securities and Exchange Board of India (SEBI) released a new circular to rationalize and categorize the Mutual Funds in India. The main aim of the circular is to standardize the scheme of all the categories. There are 36 sub categories under the main categories (Equity, Debt, Hybrid, Solution Oriented and other).

According to the circular “Mutual Fund Categorization and Rationalization”, the categories as follows.

Equity Schemes-investment in equity and equity related instruments

Debt Schemes-investment in debt instruments

Hybrid Schemes-investment in a mix of equity, debt and other assets

Solution Oriented Schemes-retirement or children savings scheme

Other Schemes-Index Funds, Fund of Funds and ETFs

Debt Scheme Sub Categories

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 upto 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-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-12 months

5.  Money Market Fund-Investment in Money Market instruments having maturity upto 1 year.

6.  Short Duration Fund-Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 1 Year-3 Years.

7.  Medium Duration Fund-Investment in Debt & Money Market instruments such that the Macaulay duration of portfolio is between 3 Years-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 4-7 Years.

9.  Long Duration Fund-Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is greater than 7 Years.

10. Dynamic Bond Fund-Investment across duration

11. Corporate Bond Fund-Minimum investments 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 & PSU Fund-Minimum investment in Debt instruments of Banks, Public Sector Undertakings, Public Financial Institutions-80% of total assets.

14. Gilt Fund-Minimum investment in Gsecs-80% of total assets (across maturity).

15. Gilt Fund with 10 Year Constant Duration-Minimum investments in Gsecs-80% of total assets such that the Macaulay duration of the portfolio is equal to 10 Years.

16. Floater Fund-Minimum investment in floating rate instruments-65% of total assets.

 


 About The Author

Dileep Ramachandran, Research Analyst with more than 4 years of total experience in the area of Equity and Mutual Fund Research.

 

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