SEBI Scraps Solution Oriented Schemes, Introduces Life Cycle Funds; Revamps Categorisation Rules

SEBI has revised several rules and discontinued solution oriented schemes. What do these changes mean for investors and what should they know? Understand the new SEBI rules and regulations. Mutual fund rules in India have changed. In its latest circular on classification and rationalization of schemes, SEBI has adjusted the categories with an aim to change the way funds are designed and managed.

Market regulator SEBI on Thursday introduced an updated classification structure for mutual fund schemes with the introduction of lifecycle funds, removal of solution oriented scheme category and stricter disclosure and duplication norms for greater uniformity and protection of investors, reported by PTI.

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The move, aimed at ensuring reality aligned positioning and curbing exaggerated return claims in scheme names, comes amid SEBI’s efforts to align its regulatory architecture with the evolving mutual fund landscape and emerging opportunities across all asset classes. In its circular, SEBI has categorized schemes into five categories, which are, equity, debt, hybrid, life cycle and other, equity funds of funds and passive schemes such as index funds and exchange-traded funds (ETFs), PTI reports further.

“Scheme names should be the same as the scheme category to facilitate identification by investors, ensure uniformity of scheme names for a particular category across mutual funds and ensure that schemes are true to label,” SEBI said.