Mutual Funds Name Change, Category consolidation – how does this affect me?

Mutual Funds Name Change

“What’s in a name? that which we call a rose by any other name would smell as sweet.”
― William Shakespeare, Romeo and Juliet

Most Indian mutual fund managers won’t agree with the above quote. SEBI has instructed Mutual fund companies to distinguish different schemes in terms of asset allocation and investment strategy. The aim is make it easier for the investor to compare the products. According to the regulator, AMCs use these names as marketing tools to attract customers and many of the new buyers may not fully understand the scheme. This makes sense if one has to choose from around 1998 mutual fund schemes (AMFI March 2016 newsletter) that have raised funds till date.

The regulator mandated fund houses to categorize all their existing and future schemes into five broad categories and 36 sub-categories. The five broad categories are – equity funds, debt funds, hybrid funds, solution-oriented funds and other funds.

The categorization and the related name change will make life easier for the investor. It will give clear understanding in which category the investments fall and returns generated by similar fund products. Secondly it will bring clarity of various terms that are defined by each fund as per their investment strategy (e.g. Large cap, Mid cap etc). Various rating agencies will now be able to rank the fund in the broad categories defined by SEBI. The investor can make more informed decision based on the expert analysis provide by various funds. This change however needs to be explained to investors in simple form by the mutual fund industry as name change might be misunderstood by lay investor as change of scheme or asset class.

Manoj Chahar
Founder & Storyteller at
Manoj is the founder of, with 15 years of corporate experience & expertise in financial markets. Manoj has corporate stints with Kotak Securities, IIFL group & Philips India. He holds an MBA (PGDM) degree from Symbiosis (SIMS) Pune.
His interests include birding & adventure activities.

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