As we speak, your fund house is either recategorising your mutual fund scheme or has already done it. In other words, if you invest in a large-cap fund, it would look like a large-cap fund, instead of anything else, going ahead too. If you invest in a corporate bond fund, it would not take unnecessary credit risk and invest in low-rated debt instruments. All this is part of an exercise that the capital market regulator, Securities and Exchange Board of India (Sebi) started in October 2017 when it came out with a list of 36 categories for mutual funds, defined these categories, and told all mutual funds to realign their schemes and their underlying portfolios to these new categories.
The first list of scheme re-categorisation is out and fancy names are being dropped. A side effect—and a much desired one—of this exercise is that the scheme names would now better reflect what your scheme is all about. So, what has changed? Words like ‘prudence’ and ‘opportunities’ have to be used sparingly now, and preferably not used at all. For instance, Mirae Asset Prudence fund—a balanced fund—is now called Mirae Asset Hybrid-Equity fund. IDBI Prudence Fund will also now be called IDBI Hybrid Equity Fund.
