In a bid to enable investors to take an informed decision while investing in mutual fund schemes as also to bring uniformity in the characteristics of similar type of schemes launched by different mutual funds, the Securities & Exchange Board of India (Sebi) today issued a circular laying down the categories of MF schemes, their characteristics and uniform description for each category. It also set five broad categories of mutual fund schemes.
Sebi said that it is desirable that different schemes launched by a mutual fund are clearly distinct in terms of asset allocation, investment strategy etc. Further, there is a need to bring in uniformity in the characteristics of similar type of schemes launched by different mutual funds. “This would ensure that an investor of mutual funds is able to evaluate the different options available, before taking an informed decision to invest in a scheme,” it said.
In order to bring the desired uniformity in the practice across mutual funds and to standardize the scheme categories and characteristics of each category, the MF schemes have been broadly classified in the following groups: (a) Equity Schemes, (b) Debt Schemes, (c) Hybrid Schemes, (d) Solution Oriented Schemes, and (e) Other Schemes.
Also, in order to ensure uniformity in respect of the investment universe for equity schemes, Sebi has defined large cap, mid cap and small cap as follows:
a. Large Cap: 1st-100th company in terms of full market capitalization
b. Mid Cap: 101st-250th company in terms of full market capitalization c. Small Cap: 251st company onwards in terms of full market capitalization
As per the circular, mutual funds would be required to adopt the list of stocks prepared by AMFI in this regard and AMFI would adhere to the following points while preparing the list:
a. If a stock is listed on more than one recognized stock exchange, an average of full market capitalization of the stock on all such stock exchanges, will be computed;
b. In case a stock is listed on only one of the recognized stock exchanges, the full market capitalization of that stock on such an exchange will be considered.
c. This list would be uploaded on the AMFI website and the same would be updated every six months based on the data as on the end of June and December of each year. The data shall be available on the AMFI website within 5 calendar days from the end of the 6 months period.
Subsequent to any updation in the list, mutual funds would have to rebalance their portfolios (if required) in line with updated list, within a period of one month.