Indian two thousand rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Debt Funds Classified Under The New Category Defined By SEBI

In order to standardise the mutual fund schemes in the country to avoid duplication and simplify choice for investors, the Securities and Exchange Board of India last year asked the fund houses to classify schemes according to standard product category definitions and have one product per category.

It defined 10 categories for equity funds, 16 for debt funds and six for hybrid funds, allowing one scheme each. The regulator gave fund houses the liberty to decide.

The schemes will be classified under five categories:

  • Equity Schemes
  • Debt Schemes
  • Hybrid Schemes
  • Solution-Oriented Schemes
  • Other Schemes

Also Read: Equity Mutual Funds Classified As Per SEBI’s Categories

Here’s a list of all debt funds classified under the new categories by Morningstar

Overnight Funds

  • Investment in overnight securities having maturity of one day.

Liquid Funds

  • Investment in debt and money market securities with maturity of up to 91 days only.

Ultra Short-Duration Funds

  • Invests in debt and money market instruments.
  • Macaulay duration—which calculates the ‘weighted average time’ before a bond holder receives cash flow—of the portfolio is between 3 months and 6 months.

Low-Duration Funds

  • Invests in debt and money market instruments.
  • Macaulay duration of the portfolio is between 6 months and 12 months.

Money Market Funds

  • Investment in money market instruments having maturity up to 1 year.

Short-Duration Funds

  • Invests in debt and money market instruments.
  • Macaulay duration of the portfolio is between 1 year and 3 years.

Medium-Duration Funds

  • Invests in debt and money market instruments.
  • Macaulay duration of the portfolio is between 3 years and 4 years.

Medium- To Long-Duration Funds

  • Invests in debt and money market instruments.
  • Macaulay duration of the portfolio is between 4 years and 7 years.

Long-Duration Funds

  • Invests in debt and money market instruments.
  • Macaulay duration of the portfolio is more than 7 years.

Dynamic Bond Funds

  • Invests across duration.

Gilt Funds

  • Minimum investment of 80 percent of total assets in government securities.

Gilt Fund With 10-Year Constant Duration

  • Minimum investment of 80 percent of total assets in government securities.
  • Macaulay duration of the portfolio is equal to 10 years.

Banking & PSU Funds

  • Minimum investment of 80 percent of total assets in debt instruments of banks, public sector undertakings, public financial institutions.

Floater Funds

  • Minimum investment of 65 percent of total assets in floating rate instruments.

Corporate Bond Funds

  • Minimum investment of 80 percent of total assets in corporate bonds.

Credit Risk Funds

  • Minimum investment of 65 percent of total assets in corporate bonds.
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