Overview

• The draft groups mutual funds into five primary categories—equity, debt, hybrid, solution-oriented and others—to simplify scheme definitions and reduce complexity.
• It allows value and contra schemes to coexist under a 50% portfolio overlap limit, with compliance monitored at launch and semi-annually.
• Funds exceeding overlap caps must rebalance within 30 business days, extendable by one month, or provide investors a no-load exit.
• Terminology would shift from “duration” to “term,” rename low-duration funds as ultra short to short term schemes and require term lengths in scheme names.
• The proposal expands residual allocations to gold, silver, REITs and InvITs and permits fund houses with over ₹50,000 crore in assets to launch additional category schemes and target-date retirement funds.