Making It Cumbersome

The new SEBI rules for mutual fund categorisation and rationalisation is not completely going to benefit investors, says Narayan Krishnamurthy

- Narayan Krishnamurthy

 At first look, the circular from SEBI asking mutual funds to classify their schemes under five broad heads sounds very helpful. However, dig deeper and you figure that in all there will be 36 different types of schemes. If the idea was to simplify mutual funds for investors, this outcome is a big joke. At present, there are 42 AMCs managing a little over ₹20 lakh crore of assets in about 2,000 fund schemes. If one takes into account the direct and regular plans, for a layman it is as good that double of that many funds exist.

So far in the absence of any defined categorisation, AMCs and mutual fund tracking and rating companies have been creating their own categorisation. This has meant that a fund may fall under different categories depending on whose categorisation it follows and who mentions it. This was perhaps the reason for the regulator to come up with categorising funds. The move of course has AMCs that&nbs