SEBI Considers Overhaul of Mutual Fund Scheme Categorisation – What Investors Should Know

The Securities and Exchange Board of India (SEBI) is planning a review of how mutual fund schemes are classified. This could mark a major shift in how you evaluate and choose your mutual funds. 🧩 Why is SEBI doing this? Currently, mutual fund houses must classify schemes into categories defined by SEBI’s 2017 framework. But over time, many schemes have begun to look and perform similarly, even when technically listed under different categories. This overlap is causing: Investor confusion — especially for retail investors trying to compare funds Lack of clarity in risk and return expectations Unintended duplication across portfolios SEBI's objective is to bring sharper distinction between categories to help you: ✅ Understand what you’re investing in ✅ Make clearer comparisons across AMCs ✅ Avoid unintentional portfolio duplication ⚙️ What changes might be coming? 🔹 Re-definition of existing fund categories 🔹 More precise rules for fund strategy, asset allocation, and labeling 🔹 Better disclosures to improve transparency 🔹 Possible merging or renaming of overlapping schemes 📌 What should investors do now? While SEBI is still in the consultation and review stage, as an investor, this is a good time to: ✅ Review your mutual fund portfolio – check if you’re exposed to similar schemes under different labels ✅ Look for true diversification instead of scheme count ✅ Stay informed – any regulatory change could affect your fund’s positioning, risk level, or even its name/structure 📰 Read the full article on Economic times. 💬 Investor Tip: Categorisation isn’t just a formality. It impacts how funds are benchmarked, managed, and regulated — and that impacts your returns and risks.