Sebi Revamps Mutual Fund Categories: Gold, Silver, Life Cycle Funds
Why in the news
Sebi revised mutual fund scheme categorisation: active equity funds can add gold and silver, and Life Cycle Funds and Sectoral Debt Funds are new.
Key facts
- Gold and silver now fit in the 20-35% non-equity slice, which earlier was limited to debt, REITs and InvITs.
- Solution-oriented schemes (retirement, children’s) are dropped as separate categories.
- Equity and hybrid categories go from 11 to 12; fund houses may run both value and contra funds, and both balanced and aggressive hybrid funds.
- Overlap cap: 50%; existing schemes have three years to align or merge.
- Fund of Funds categories are streamlined.
Life Cycle versus Sectoral Debt
| Feature | Life Cycle Funds | Sectoral Debt Funds |
|---|---|---|
| Idea | Goal-based, fixed maturity of 5-30 years | Targeted fixed-income exposure to sectors |
| Holdings | Equity, debt, REITs/InvITs, commodity derivatives, gold and silver ETFs | At least 80% in AA+ bonds (financial services, energy, infrastructure, housing) |
| Trait | Glide path from equity to safer assets; open-ended, exit load up to 3% in year one | Sector focus |
Exam angle
- Regulator Sebi; figures 20-35%, 5-30 years, 80%, 50%, 3%.
- Term: glide path.