Categorization and Rationalization of Mutual Fund Schemes




December 4, 2017

All Mutual Funds/Asset Management Companies (AMCs)/ Trustee Companies/Boards of Trustees of Mutual Funds

Sir/ Madam,

Subject: Categorization and Rationalization of Mutual Fund Schemes

1. SEBI, vide circular no. SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 6, 2017, has issued guidelines regarding categorization and rationalization of Mutual Fund Schemes.

2. Upon consideration of the subsequent representation received from AMFI, it has been decided to partially modify the aforesaid circular as under:

i. In pt. 8 of the aforesaid circular, after clause c, an additional clause ‘d’ shall be added as follows:

d. While preparing the single consolidated list of stocks, average full market capitalization of the previous six month of the stocks shall be considered.

ii. In respect of sr. nos. 3, 4, 6, 7, 8 and 9 of Section B of Annexure to the aforesaid circular, it is clarified that Macaulay duration shall be at portfolio level and accordingly, the column ‘Type of Scheme (Uniform description of scheme)’ of the respective scheme of the aforesaid sr. nos. is modified and shall be read as given below: ‘An open ended XYZ scheme investing in instruments such that the Macaulay duration of the portfolio is between A to B years (please refer to page no. ) #.’

# Please refer to the page number of the Offer Document on which the concept of Macaulay’s Duration has been explained

iii. With respect to the Medium Duration Fund and Medium to Long Duration Fund (sr. no. 7 and sr. no. 8 of Section B of the Annexure to the Circular), the characteristics of the scheme shall remain the same under normal circumstances as stated in the circular dated October 6, 2017. However, the fund manager, in the interest of investors, may reduce the portfolio duration of the aforementioned schemes upto one year, in case he has a view on interest rate movements in light of anticipated adverse


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