The investment market is standardising day by day, and with new ways of investment, market risks have increased to a greater extent.
In recent days, SEBI has pulled out strict mandates for schemes after re-categorisation, there will not be a massive disparity in the return given by most schemes in categories.
The step was necessary to check methods by which the investor firms regulated their schemes, as it created a risk of forgery and wrong market practices. The regulatory board advised all index mutual funds to be guided by mandates that will allow them to gain market profit inflow.
Does it make more sense to invest in mutual funds after re-categorisation?
The Security and Exchange Board of India known as SEBI has asked fund houses to segregate their schemes into different categories based on target investors they are looking for. This categorisation has helped customers to choose between different schemes easily and invest in the market after comparing between different index funds.
Thus, it is always advisable to categorise index mutual funds for the ease of investors. If a person is looking to open a brokerage or investment firm, it must be kept in mind to step into the market by following the SEBI category mandates. There are various legal instructions given by authority to provide legal marketing solutions. The target customer must be helped in the process of selection.
The basic list of these categories are:
- Equity (10 subcategories)
- Debt (16 subcategories)
- Hybrid (6 subcategories)
- Solution oriented (2 subcategories)
- Others (2 subcategories)
Rather than this, according to SEBI mandates, each house can have only one scheme in a single category and not more.
Re-categorisation must be done while choosing index mutual funds for ease of marketing.
