Investors can do without solution-oriented funds

Now that solution-oriented funds will have a lock-in of five years, most investors will be better off investing in open-end diversified equity funds to achieve similar investment outcomes

The Securities and Exchange Board of India (Sebi) has through a circular introduced a new classification of funds. All open-end mutual fund schemes will now fall under one of the following five categories: equity, debt, hybrid, solution-oriented, and others (which will include index funds, exchange-traded funds or ETFs, and fund of funds). Asset management companies (AMCs) will be allowed one scheme in each category, thereby reducing the number of funds and making it easier for investors to select the right funds. Goal-oriented schemes, such as children's plans and retirement plans, will fall under the solution-oriented category. All funds under this