Sebi issues draft circular on MF scheme categorisation, seeks public feedback
SEBI noted a recurring issue of portfolio overlap among various schemes offered by different fund houses. In several cases, the underlying investments in supposedly distinct schemes were found to be significantly similar.
- Jul 18, 2025,
- Updated Jul 18, 2025 7:06 PM IST
Markets regulator Securities and Exchange Board of India (SEBI) on Friday released a draft circular seeking public comments on proposed revisions to the framework for categorisation and rationalisation of mutual fund schemes. The draft is open for feedback from all stakeholders, SEBI said.
This initiative follows SEBI’s earlier efforts through circulars issued on October 6, 2017, and November 6, 2020, which aimed to standardise mutual fund scheme categories and characteristics. The objective was to bring consistency across schemes offered by different asset management companies, enhance comparability, and simplify investor decision-making.
Since those circulars were introduced, the mutual fund industry has grown significantly in terms of assets under management and investor participation. This expansion has coincided with changing investor preferences, broader asset allocation strategies, and the introduction of new investment products such as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). In light of these developments, and following several representations from the mutual fund industry and the Association of Mutual Funds in India (AMFI), SEBI has identified the need to review the existing framework.
During its review, SEBI noted a recurring issue of portfolio overlap among various schemes offered by different fund houses. In several cases, the underlying investments in supposedly distinct schemes were found to be significantly similar, which diminished the intended purpose of categorisation and potentially confused investors. As a result, SEBI has proposed to introduce specific limits and guidelines to prevent such overlaps and to ensure that each scheme remains clearly differentiated.
The revised circular aims to improve the clarity of existing categories, introduces new scheme types to reflect current investment trends, and addresses the problem of portfolio similarity. To ensure that the proposed changes are practical and take into account public interest, SEBI has invited comments from investors, fund managers, institutions, and the general public. All feedback must be submitted by August 8, 2025.
The consultation form lists all proposals included in the draft. Respondents must select each proposal individually, indicate their level of agreement, and, if they wish to comment further, select the appropriate option to open a text box for entering remarks, SEBI suggested.
Markets regulator Securities and Exchange Board of India (SEBI) on Friday released a draft circular seeking public comments on proposed revisions to the framework for categorisation and rationalisation of mutual fund schemes. The draft is open for feedback from all stakeholders, SEBI said.
This initiative follows SEBI’s earlier efforts through circulars issued on October 6, 2017, and November 6, 2020, which aimed to standardise mutual fund scheme categories and characteristics. The objective was to bring consistency across schemes offered by different asset management companies, enhance comparability, and simplify investor decision-making.
Since those circulars were introduced, the mutual fund industry has grown significantly in terms of assets under management and investor participation. This expansion has coincided with changing investor preferences, broader asset allocation strategies, and the introduction of new investment products such as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). In light of these developments, and following several representations from the mutual fund industry and the Association of Mutual Funds in India (AMFI), SEBI has identified the need to review the existing framework.
During its review, SEBI noted a recurring issue of portfolio overlap among various schemes offered by different fund houses. In several cases, the underlying investments in supposedly distinct schemes were found to be significantly similar, which diminished the intended purpose of categorisation and potentially confused investors. As a result, SEBI has proposed to introduce specific limits and guidelines to prevent such overlaps and to ensure that each scheme remains clearly differentiated.
The revised circular aims to improve the clarity of existing categories, introduces new scheme types to reflect current investment trends, and addresses the problem of portfolio similarity. To ensure that the proposed changes are practical and take into account public interest, SEBI has invited comments from investors, fund managers, institutions, and the general public. All feedback must be submitted by August 8, 2025.
The consultation form lists all proposals included in the draft. Respondents must select each proposal individually, indicate their level of agreement, and, if they wish to comment further, select the appropriate option to open a text box for entering remarks, SEBI suggested.