Categorization of Equity Mutual Fund Schemes

Posted by Aniruddh Bhilvare on February 04, 2020 · 5 mins read

In order to bring the desired uniformity in the practice, across Mutual Funds and to standardize the scheme categories and characteristics of each category, SEBI has classified mutual fund schemes in the following categories:

  • Equity Schemes (10 categories)
  • Debt schemes (16 categories)
  • Hybrid Schemes (6 categories)
  • Solution Oriented Schemes (2 categories)
  • Other Schemes (2 categories)

In this article, we are going to learn about new categorization of Equity Mutual Fund Schemes. Equity schemes invest predominantly in listed shares of well known companies. In order to ensure uniformity in respect of the investment universe for equity schemes, it has been decided to define large cap, mid cap and small cap as follows:

Company Defination
Large Cap 1st to 100th company in terms of full market capitalization
Mid Cap 101st to 250th company in terms of full market capitalization
Small Cap 251st company onwards in terms of full market capitalization
Note: Market capitalization is total number of shares, multiplied by the current market price of a share or stock.

As per SEBI, equity schemes have been further classified into 10 categories, the features of which along with the uniform scheme description have been given below:

# Schemes Characteristics Uniform Description
1 Large Cap Fund Minimum 80% of total assets should be invested in equity and its related securities of large cap firms An open ended equity scheme predominantly investing in large cap stocks
2 Mid Cap Fund Minimum 65% of total assets should be invested in equity and its related securities of mid cap firms An open ended equity scheme predominantly investing in mid cap stocks
3 Small Cap Fund Minimum 65% of total assets should be invested in equity and its related securities of small cap firms An open ended equity scheme predominantly investing in small cap stocks
4 Multi Cap Fund Minimum 65% of total assets should be invested in equity and its related stocks An open ended equity scheme investing across large cap, mid cap, small cap stocks
5 Large & Mid Cap Fund Minimum 35% of total assets in equity and its related securities should be invested in large cap firms and 35% of total assets in equity and its related securities of mid cap firms An open ended equity scheme investing in both large cap and midcap stocks
6 Dividend Yield Fund Minimum investmemt should be 65% of total assets in equity and majorly in dividend yielding stocks An open ended equity scheme predominantly investing in dividend yielding stocks
7 Value Fund* Minimum investmemt should be 65% of total assets in equity by following value investment strategy An open ended equity scheme following a value investment strategy
7 Contra Fund* Minimum investmemt should be 65% of total assets in equity by following contrarian investment strategy An open ended equity scheme following contrarian investment strategy
8 Focused Fund Scheme should focused on the number of stocks(maximum 30) and Minimum investment in equity & equity related instruments should be 65% of total assets An open ended equity scheme investing in maximum 30 stocks
9 Sectoral/Thematic Fund Minimum 80% of total assets should be invested in equity and its related securities of a particular sector/ particular theme An open-ended equity scheme investing in (name of the theme or sector)
10 ELSS Fund Minimum 80% of total assets should be invested in equity and its related securities in accordance with Equity Linked Saving Scheme, 2005 notified by Ministry of Finance An open ended equity linked saving scheme with a statutory lock in of 3 years and tax benefit
*Fund house will be permitted to offer either Value fund or Contra fund.

In next article, we will review Debt mutual fund schemes.