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 category will now have a lock-in of five years. In a child plan, for instance, investors will not be allowed withdrawal either for five years or until the child attains the age of majority, whichever comes earlier. Retirement funds will similarly not allow withdrawal either for five years or until the investor retires, whichever comes earlier.
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First Published: Wed, April 18 2018. 00:24 IST
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