1. With its latest standardization, categorization and rationalization of MFs, Sebi has helped existing investors to reallign their portfolio, while making it much easier for the new ones to build one, as per their individual risk profile.
2. It has done so by:-
a) Clearly distinguishing MFs in terms of asset allocation, investment strategy etc.
b) Bringing uniformity in characteristics of similar type of schemes launched by AMCs,
c) Ensuring that an MF investor is able to evaluate different options available before taking an informed decision to invest in a scheme,
d) Enhancing all disclosures everywhere to include the scheme's Uniform disclosure in addition to Type of scheme,
e) Ensuring uniformity in equity investment universe by redefining large cap, mid cap and small cap stocks,
f) Permitting only one scheme per category for each AMC, except index funds, ETFs, FoFs and sectoral/ thematic funds,
g) Winding up, merging, changing fundamental attributes, etc. of existing similar and unalligned schemes,
h) Ensuring that schemes should not result in duplication/minor modifications of other schemes, and
i) Suitably modifying investment objective, strategy and benchmark of each scheme to bring it in line with the new categories of schemes.
3. It has, therefore, become easier to select funds themselves with clearly demarcated risk types, like duration-wise debt funds, debt-equity wise hybrid funds, market-cap wise equity funds, solution-oriented funds, index funds, FoFs, sectoral funds, thematic funds, etc.
4. Any market-related investment will always be fraught with various types of risk, but investors can now select MFs with a much higher degree of confidence in their risk-taking at the beginning itself.
5. Thereafter, we can just concentrate on avoiding risky mistakes like:
a) Having no asset allocation strategy,
b) Overweighting on high-risk, non-diversified funds,
c) Duplication of funds in same categories, and
d) Funds not matching our risk profile or appetite.
2. It has done so by:-
a) Clearly distinguishing MFs in terms of asset allocation, investment strategy etc.
b) Bringing uniformity in characteristics of similar type of schemes launched by AMCs,
c) Ensuring that an MF investor is able to evaluate different options available before taking an informed decision to invest in a scheme,
d) Enhancing all disclosures everywhere to include the scheme's Uniform disclosure in addition to Type of scheme,
e) Ensuring uniformity in equity investment universe by redefining large cap, mid cap and small cap stocks,
f) Permitting only one scheme per category for each AMC, except index funds, ETFs, FoFs and sectoral/ thematic funds,
g) Winding up, merging, changing fundamental attributes, etc. of existing similar and unalligned schemes,
h) Ensuring that schemes should not result in duplication/minor modifications of other schemes, and
i) Suitably modifying investment objective, strategy and benchmark of each scheme to bring it in line with the new categories of schemes.
3. It has, therefore, become easier to select funds themselves with clearly demarcated risk types, like duration-wise debt funds, debt-equity wise hybrid funds, market-cap wise equity funds, solution-oriented funds, index funds, FoFs, sectoral funds, thematic funds, etc.
4. Any market-related investment will always be fraught with various types of risk, but investors can now select MFs with a much higher degree of confidence in their risk-taking at the beginning itself.
5. Thereafter, we can just concentrate on avoiding risky mistakes like:
a) Having no asset allocation strategy,
b) Overweighting on high-risk, non-diversified funds,
c) Duplication of funds in same categories, and
d) Funds not matching our risk profile or appetite.