If mutual funds are often touted as one of the best vehicles for you—the small investor—to invest in equity and debt markets, then picking a fund should be easy, right? That was the intention of the capital market regulator, the Securities and Exchange Board of India (Sebi), when it started the biggest exercise seen in the ₹23 trillion Indian mutual fund industry in recent years—the re-categorisation and consolidation of mutual fund schemes. But a look at the number of categories it has laid out for various fund houses to put their schemes in may have made it tougher for you to pick a mutual fund.
Take the case of equity funds. There are now 10 categories of equity funds. Add four more categories termed as “hybrid” that can have an equity tilt. In short, you have 15 types of equity-oriented funds that you can now choose from. Should you pick one in each of these categories?