CIRCULAR
HO/24/13/15(2)2026-IMD-RAC4/I/5764/2026 February 26, 2026
To,
All Mutual Funds
All Asset Management Companies (AMCs)
All Trustee Companies/ Board of Trustees of Mutual Funds
Association of Mutual Funds in India (AMFI)
Madam/ Sir,
Subject: Categorization and Rationalization of Mutual Fund Schemes
1. SEBI vide circular no. SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06, 2017, read with
circular no. SEBI/HO/IMD/DF3/CIR/P/2020/228 dated November 06, 2020 issued directions
regarding categorization and rationalization of Mutual Fund Schemes. The said circulars
were consolidated as clause 2.6 of the chapter 2 of Master Circular for Mutual Funds dated
June 27, 2024 (hereinafter referred as “Master Circular”).
2. To accommodate the continuously evolving landscape of mutual fund investments and the
emergence of opportunities across various asset classes, Clause 2.6 of Chapter 2 of the
Master Circular stands superseded as under:
2.6 Categories of Schemes, Scheme Characteristics and Type of Scheme (Uniform Description
of Schemes):
2.6.1 The Schemes are broadly classified as under:
A. Equity Scheme: Mutual Fund scheme predominantly investing in equity and
equity related instruments;
B. Debt Scheme: Mutual Fund scheme predominantly investing in debt and debt
related instruments;
C. Hybrid Scheme: Mutual Fund scheme investing in a mix of asset class i.e.
equity, debt, InvITs and commodities related instruments as permitted by SEBI.
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D. Life Cycle Funds
E. Other Schemes:
i. Fund of Fund Schemes
ii. Passive Schemes for e.g. Index Funds / ETFs
2.6.2 ‘Residual portion’ mentioned in the circular refers to the part of a scheme’s corpus
not invested in its main, core asset classes as provided in the scheme characteristics.
2.6.3 The details of the scheme categories under each of the aforesaid groups along with
their characteristics and uniform description are as under:
A. Equity Schemes:
Sr. Category Scheme Characteristics Type of scheme (uniform
No. of description of scheme)
Schemes
1 Multi Cap Minimum investment in equity & equity An open ended equity
Fund related instruments - 75% of total assets in the scheme investing across
following manner: large cap, mid cap, small
cap stocks
a) Minimum investment in equity & equity
related instruments of large cap companies
- 25% of total assets;
b) Minimum investment in equity & equity
related instruments of mid cap companies -
25% of total assets;
c) Minimum investment in equity & equity
related instruments of small cap companies
- 25% of total assets
2 Large Cap Minimum investment in equity & equity An open ended equity
Fund related instruments of large cap companies- scheme predominantly
80% of total assets investing in large cap
stocks
3 Large & Minimum investment in equity & equity An open ended equity
Mid Cap related instruments of large cap companies- scheme investing in both
Fund 35% of total assets large cap and mid cap
Minimum investment in equity & equity stocks.
related instruments of mid cap stocks- 35% of
total assets
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4 Mid Cap Minimum investment in equity & equity An open ended equity
Fund related instruments of mid cap companies - scheme predominantly
65% of total assets investing in mid cap stocks
5 Small cap Minimum investment in equity & equity An open ended equity
Fund related instruments of small cap companies- scheme predominantly
65% of total assets investing in small cap
stocks
6 Flexi Cap Minimum Investment in equity & equity An open ended dynamic
Fund related instruments – 65% of total assets equity scheme investing
across large cap, mid cap,
small cap stocks
7 Dividend Scheme should predominantly An open ended equity
Yield Fund invest in dividend yielding stocks. scheme predominantly
investing in dividend
Minimum investment in equity & equity yielding stocks
related instruments - 80% of total assets
8 Value Scheme should follow a value An open ended equity
Fund investment strategy. scheme following a value
Minimum investment in equity & equity investment strategy
related instruments - 80% of total assets
9 Contra Scheme should follow a contrarian investment An open ended equity
Fund strategy. scheme following
Minimum investment in equity & equity contrarian investment
related instruments - 80% of total assets strategy
10 Focused A scheme focused on the number of stocks An open ended equity
Fund (No. (maximum 30) scheme investing in
of Stocks) maximum 30 stocks
Minimum investment in equity & equity (mention where the
related instruments - 80% of total assets scheme intends to focus,
viz., multi cap, large cap,
mid cap, small cap)
11 Sectoral Minimum investment in equity & equity An open ended equity
Fund related instruments of a particular sector - scheme investing in __
80% of total assets. sector (mention the
specific sector)
12 Thematic Minimum investment in equity & equity An open ended equity
Fund related instruments of a particular theme- scheme investing in __
80% of total assets. theme (mention the
specific theme)
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A theme may be a combination of two or more
sectors.
13 ELSS – Tax Minimum investment in equity & equity An open ended scheme
Saver related instruments - 80% of total assets with attributes in
Fund accordance with Equity
Linked Saving Scheme,
2005 notified by Ministry
of Finance
2.6.3.1 For definition of large cap, mid cap and small cap, clause 2.7 of Master Circular shall be
referred.
2.6.3.2 For ESG Funds, para 3.11 of Master Circular shall be referred.
2.6.3.3 In the equity category schemes, Mutual Funds may invest residual portion in equity,
money market instruments and other liquid instruments, gold and silver instruments as
permitted by SEBI and in InvITs, subject to the ceilings laid out in MF regulations with
respect to the respective asset class.
2.6.3.4 Mutual Funds shall be permitted to offer both Value and Contra funds subject to the
condition that scheme portfolio overlap between the two schemes shall not be more
than 50%.
2.6.3.5 For any scheme offering in sectoral/thematic equity category, Mutual Funds shall
ensure that no more than 50% of the schemes portfolios would overlap with other
equity schemes in sectoral/thematic category and other equity schemes categories
except for large cap scheme.
2.6.3.6 The overlap condition shall be computed on a quarterly basis using the daily portfolio
overlap values i.e. the average of daily portfolio overlap values over a quarter. Detailed
methodology for computing portfolio overlap is provided at Annexure A to this circular.
2.6.3.7 Existing sectoral/thematic schemes shall ensure compliance with regard to portfolio
overlap limits within 3 years from the date of this circular. Schemes unable to meet the
portfolio overlap criteria after 3 years shall be mandatorily merged with other schemes
as per applicable provisions.
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2.6.3.8 In order to realign the portfolio in terms of the limit as mentioned at 2.6.3.5 above, the
following glide path may be adopted by mutual funds:
Period Realignment expected
Year 1 35% of the excess overlap
Year 2 Additional 35%
Year 3 Remaining 30%
2.6.3.9 Mutual Funds shall launch sectoral/thematic funds as per the list of sectors/themes as
published and updated by AMFI in consultation with SEBI on half yearly basis.
B. Debt Schemes
Sr. Category of Scheme Characteristics Type of scheme (uniform
No. Schemes description of scheme)
1 Overnight Investment in overnight securities An open ended debt
Fund** having maturity of 1 day scheme investing in
overnight securities
Overnight funds can deploy, not
exceeding, 5% of the net assets of the
scheme in G-secs and/or T-bills with a
residual maturity of upto 30 days for
the purpose of placing the same as
margin and collateral for certain
transactions.
2 Liquid Fund $ Investment in only Debt and money An open ended liquid
** market securities with maturity of scheme
upto 91 days
3 Ultra Short Investment in Debt & Money Market An open ended ultra-short
Term Fund instruments such that the Macaulay term debt scheme investing
duration of the portfolio is between in instruments such that the
3 months to 6 months Macaulay duration of the
portfolio is between 3
months to 6 months
4 Ultra Short to Investment in Debt & Money Market An open ended debt
Short Term instruments such that the Macaulay scheme investing in
Fund duration of the portfolio is between instruments such that the
6 months to 12 months Macaulay duration of the
portfolio is between 6
months to 12 months
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5 Money Market Investment in Money Market An open ended debt
Fund instruments having maturity up to 1 scheme investing in money
year market instruments
6 Short Term Investment in Debt & Money Market An open ended short term
Fund instruments such that the Macaulay debt scheme investing in
duration of the portfolio is between instruments such that the
1 year to 3 years Macaulay duration of the
portfolio is between 1 year
to 3 years
7 Medium Term Investment in Debt & Money Market An open ended medium
Fund instruments such that the Macaulay term debt scheme investing
duration of the portfolio is between in instruments such that the
3 years to 4 years. Macaulay duration of the
portfolio is between 3 years
Portfolio Macaulay duration under to 4 years
anticipated adverse situation is 1 year
to 4 years
8 Medium to Investment in Debt & Money Market An open ended medium
Long instruments such that the Macaulay term debt scheme investing
Term Fund duration of the portfolio is between in instruments such that the
4 to 7 years. Macaulay duration of the
portfolio is between 4 years
Portfolio Macaulay duration under to 7 years
anticipated adverse situation is 1
year to 7 years
9 Long Term Fund Investment in Debt & Money Market An open ended debt
Instruments such that the Macaulay scheme investing in
duration of the portfolio is greater instruments such that the
than 7 years Macaulay duration of the
portfolio is greater than 7
years
10 Dynamic Term Investment across duration An open ended dynamic
Fund debt scheme investing
across duration.
11 Corporate Bond Minimum investment in corporate An open ended debt
Fund bonds - 80% of total assets (only in scheme predominantly
AA+ and above rated corporate investing in AA+ and above
bonds) @ rated corporate bonds
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12 Credit Risk Minimum investment in corporate An open ended debt
Fund bonds - 65% of total assets (only in AA scheme predominantly
and below rated corporate bonds) @ investing in AA and below
rated
corporate bonds (excluding
AA+ rated corporate bonds)
13 Banking and Minimum investment in Debt An open ended debt
PSU Debt Fund instruments of banks, Public Sector scheme predominantly
Undertakings, Public Financial investing in Debt
Institutions and Municipal Bonds - instruments of banks,
80% of total assets @ Public Sector Undertakings,
Public Financial Institutions
and Municipal Bonds
14 Gilt Fund Minimum investment in G-secs- 80% An open ended debt
of total assets (across maturity) scheme investing in
government securities
across maturity
15 10-year Minimum investment in G-secs- 80% An open ended debt
Constant of total assets such that the Macaulay scheme investing in
Maturity Gilt duration of the portfolio is equal to government securities
Fund 10 years having a constant
maturity of 10 years
16 Floating Minimum investment in floating rate An open ended debt
Interest Rates instruments (including fixed rate scheme predominantly
Fund instruments converted to floating investing in floating rate
rate exposures using instruments (including fixed
swaps/derivatives)- 65% of total rate instruments converted
assets @ to floating rate exposures
using swaps/derivatives)
17 Sectoral Fund Minimum investment in debt & debt An open ended debt
related instruments of a particular scheme investing in __
sector across duration (only in AA+ and sector (mention the sector)
above rated corporate bonds)- 80% of
total assets.
Sectoral Debt Funds may be launched
in following sectors: Financial Services,
Energy, Infrastructure, Housing, Real
Estate.
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**Provision as mentioned at Paragraph 8.4.5 of Master Circular shall be followed for
Uniform cut-off timings for applicability of Net Asset Value in respect of Liquid Fund and
Overnight Fund.
$ All provisions mentioned at Paragraph 1.13, 8.4.2.1.c, 12.6 of Master Circular in respect
of liquid schemes shall be applicable.
Concept of Macaulay's Duration shall be explained in the scheme information document.
It is clarified that Macaulay duration shall be mentioned at portfolio level.
@ For asset allocation limits considering minimum liquid assets requirement, refer
Paragraph 4.6 of Master Circular. For exclusion of investment in units of CDMDF from
asset allocation limits, please refer Paragraph 2.10 of Master Circular.
2.6.3.10 With respect to the Medium Term Fund and Medium to Long Term Fund, the
characteristics of the scheme shall remain the same under normal circumstances.
However, the fund manager, in the interest of investors, may reduce the portfolio
duration of the aforementioned schemes up to one year, in case he has a view on
interest rate movements in light of anticipated adverse situation. The AMC shall be
required to mention its asset allocation under such adverse situation in its scheme
information documents.
2.6.3.11 Whenever the portfolio duration is reduced below the specified floors of 3 years and 4
years in respect of Medium Term Fund and Medium to Long Term Fund respectively,
the AMC shall be required to record the reasons for the same with adequate
justification and maintain the same for inspection. The written justifications shall be
placed before the Trustees in the subsequent Trustee meeting. Further, the Trustees
shall also review the portfolio and report the same in their Half Yearly Trustee Report
to SEBI.
2.6.3.12 Sectoral debt scheme shall be offered after ensuring that there is sufficient availability
of investment grade paper in market for the sectors in which sectoral debt fund is
offered by the respective AMC.
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2.6.3.13 Sectoral exposure limits as outlined in clause 12.9.1 of the Master Circular shall not be
applicable to the sectoral debt funds.
2.6.3.14 Mutual Funds may invest the residual portion of debt category schemes in InvITs except
for Overnight Fund, Liquid Fund, Ultra-Short Duration Fund, Low Duration Fund and
Money Market Fund, subject to the ceilings laid out in MF regulations.
C. Hybrid Schemes
Sr. Category of Scheme Characteristics Type of scheme (uniform
No. Schemes description of scheme)
1 Conservative Investment in equity & equity An open ended hybrid
Hybrid Fund related instruments- between scheme investing
10% and 25% of total assets; predominantly in debt
instruments
Investment in Debt instruments-
between 75% and 90% of total
assets
2 Balanced Hybrid Equity & Equity related An open ended balanced
Fund instruments - between 40% and scheme investing only in
60% of total assets; equity and debt instruments.
No Arbitrage is permitted in
Debt instruments - between 40% this scheme.
and 60% of total assets
No Arbitrage would be permitted
in this scheme
3 Aggressive Equity & Equity related An open ended hybrid
Hybrid Fund instruments- between 65% and scheme investing
80% of total assets; predominantly in
equity and equity related
Debt instruments- between 20% instruments
35% of total assets
4 Dynamic Asset Investment in equity/ debt that is An open ended dynamic
Allocation managed dynamically asset allocation fund
Fund investing in debt and equity
instruments only
5 Multi Asset Invests in at least three asset An open ended scheme
Allocation classes with a minimum allocation
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of at least 10% each in all three investing in __ _ ,__ ,__
asset classes (mention the three different
asset classes)
6 Arbitrage Fund Scheme following arbitrage An open ended scheme
strategy. investing in arbitrage
Minimum investment in equity & opportunities. No investment
equity related instruments - 65% in InvITs permitted.
of total assets.
Asset allocation in case of
defensive consideration shall be
stated in the SID.
Exposure in debt instruments
shall be limited to government
securities with maturity less than
1 year as well as repo of
government bonds only.
7 Equity Savings Minimum investment in equity & An open ended scheme
equity related instruments- 65% investing in equity, arbitrage
of total assets. and debt
Net equity exposure- 15%-40% of
total assets
Minimum Investment in debt-
10% of total assets.
Maximum Arbitrage exposure has
to be stated in the SID.
Minimum hedged & unhedged
exposure to be stated in the SID.
Asset Allocation under defensive
considerations may also be stated
in the Offer Document
2.6.3.15 In the hybrid category schemes, Mutual Funds may invest residual portion in InvITs
(except for arbitrage funds), ETCDs, Gold ETFs and Silver ETFs, subject to the ceilings
laid out in MF regulations w.r.t the respective asset class.
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2.6.3.16 Solution Oriented Schemes: Solutions oriented scheme category is being discontinued
w.e.f the date of the circular. Existing schemes in this category shall stop all
subscriptions with immediate effect. Such schemes shall be merged with any other
scheme having similar asset allocation and risk profile with prior approval from SEBI.
2.6.3.17 Foreign securities will not be treated as a separate asset class.
D. Life Cycle Funds
Sr. Category Scheme Characteristics Type of scheme (uniform
No of description of scheme)
Schemes
1 Life Cycle Scheme following glide path strategy based An open ended fund with
Funds investing across various asset classes i.e. attributes of pre-
Equity, Debt, InvITs, ETCDs, Gold & Silver ETF. determined maturity and
glide path for goal based
Detailed structure placed at Annexure B investing.
E. Other Schemes:
Sr. Category of Scheme Characteristics Type of scheme (uniform
No Schemes description of scheme)
1 Index Funds/ Minimum investment in securities An open ended scheme
ETFs of a particular index (which is replicating/ tracking __ index
being replicated/ tracked)- 95% of
total assets
2 FoFs (Overseas/ Minimum investment in the An open ended fund of fund
Domestic) underlying fund- 95% of total scheme investing in fund
assets (mention the underlying funds)
2.6.4 For FoFs with multiple underlying, framework issued vide communication dated June
30, 2025 (Annexure C) to AMFI shall be referred.
2.6.5 For easy identification by investors, in order to bring uniformity in names of schemes
for a particular category across Mutual Funds and to ensure that schemes remain “true-
to-label”, the scheme name shall be the same as the scheme category. Words/ phrases
that highlight/ emphasize only the return aspect of the scheme shall not be used in the
name of the scheme.
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Further, the ‘type of scheme’ (mentioned below the scheme name in the offer
documents/ advertisements/ marketing material/etc.) should adhere to the description
given in the third column of the tables, as applicable.
2.6.6 Clause 1.4.1 of the Master Circular stands deleted.
2.6.7 Pursuant to the issuance of this circular, the nomenclature, investment objective,
investment strategy, benchmark and other parameters of each scheme shall be suitably
modified (wherever applicable) to bring it in line with the categories of schemes listed
above. Such changes shall not be considered as fundamental attribute change. Existing
schemes shall comply with the provisions of this circular within 6 months from its date
of issuance.
2.6.8 Mutual Funds shall disclose category wise portfolio overlap levels i.e. equity scheme vs
other equity schemes, debt scheme vs other debt schemes and hybrid vs other hybrid
schemes. Such disclosure shall be published on AMC website for investor
communication on a monthly basis. Detailed Methodology for computing portfolio
overlap is provided at Annexure A to this circular.
3. This circular shall come into force with effect from the date of this circular.
4. This Circular is issued in exercise of the powers conferred by Section 11(1) of the Securities
and Exchange Board of India Act, 1992 read with Chapter VI-C of the SEBI (Mutual Funds)
Regulations 1996 to protect the interest of investors in securities and to promote the
development of, and to regulate the securities market.
5. This Circular is available at www.sebi.gov.in under the link “Legal ->Circulars”.
Yours sincerely,
Anupma Chadha
General Manager
Investment Management Department
+91-22-26449319
anupmac@sebi.gov.in
Page 12 of 12
Annexure A
Methodology for portfolio overlapping
1. Weightage of each scrip in a scheme shall be calculated as: Investment made in a particular
scrip (ISIN) wise as percentage of AUM of the scheme.
2. Portfolio overlap shall be computed at the level of individual ISINs. Only common scrips held
by both schemes shall be considered for overlap calculation, scrips not common to both
schemes shall be assigned a weightage of zero.
3. For each common scrip, the minimum weightage between the two schemes shall be
considered.
4. The overall portfolio overlap between the two schemes shall be the sum of such minimum
weightages of all common scrips as indicated in the illustrative table below:
Scrips Weightage of Scrip in Scheme A Weightage of Scrip in Scheme B Overlap
Scrip P 10% 25% 10%
Scrip Q 15% 30% 15%
Scrip R 20% 10% 10%
Scrip S 10% - 0
Scrip X - 25% 0
Scrip Y 25% 10% 10%
Scrip Z 20% - 0
Total 100% 100% 45%
5. Accordingly, portfolio overlap shall be calculated using the following formula:
Portfolio Overlap (%) =∑𝑛 min(𝑤 ,𝑤 ) 𝑋 100
𝑖=1 𝑖𝐴 𝑖𝐵
w - represents the weightage of the ith common security (ISIN) in Scheme A
iA
w - represents the weightage of the ith common security (ISIN) in Scheme B
iB
w - Market value of security i
i
Total AUM of the scheme
Annexure B
Life Cycle Funds
An open ended fund with a target date maturity following a glide path investing in a mix of asset
classes i.e. Equity, Debt, InvITs, ETCDs, Gold & Silver ETF.
1. Mutual Fund may launch Life Cycle Funds with a minimum tenure of 5 years and a maximum
tenure of 30 years. Such fund may be launched for tenures in multiple of 5 years and a
maximum of 6 funds by a Mutual Fund can be active for subscription at any given point in
time. Additionally, as each fund reaches less than 1 year to maturity, such fund may be merged
with nearest maturity Life Cycle Fund with positive consent from the unitholders.
2. Asset Allocation for Life Cycle Funds to be followed in following manner:
For Life Cycle Funds with maturity of 30 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ETCDs/InvITs (%)
15-30 Years 65-95 5-25 0-10
10-15 Years 65-80 5-25 0-10
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 25 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ ETCDs /InvITs (%)
15-25 Years 65-95 5-25 0-10
10-15 Years 65-80 5-25 0-10
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 20 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ ETCDs /InvITs (%)
15-20 Years 65-95 5-25 0-10
10-15 Years 65-80 5-25 0-10
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 15 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ ETCDs /InvITs (%)
10-15 Years 65-80 5-25 0-10
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 10 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ ETCDs /InvITs (%)
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 5 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ ETCDs /InvITs (%)
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
** Exposure in debt instruments shall be limited to AA & above rated instruments with residual
maturity less than the target maturity of scheme.
ETCDs shall be based only on Gold/Silver.
For years to maturity less than 5 years, all Life Cycle Funds may take equity arbitrage exposure
upto 50% in addition to the investment range specified for equity while ensuring that total
investment in equity and equity related instruments remains within 65%- 75% in such schemes
(as defined above).
3. In order to inculcate financial discipline, in life cycle funds, an exit load of 3% would be
chargeable on any exit by an investor within one year of investment; an exit load of 2% within
first two years of investment and 1% in the first three years of investment.
4. Life Cycle Funds shall follow benchmark framework as prescribed for Multi Asset Allocation
Fund.
5. Life Cycle Funds shall include the maturity date in the nomenclature of the scheme, for e.g.
Life Cycle Fund 2055, Life Cycle Fund 2045 etc.
Annexure C
Standardized Framework for Fund of Fund (FoF) Schemes
Applicability- The captioned framework is applicable for all Fund of Fund Schemes having more
than one underlying funds.
CATEGORISATION OF FUND OF FUND SCHEMES (with multiple underlying Funds)
AMCs may launch FOFs with multiple underlying funds under the following broad categories:
S.no. Category of FOF Sub-Category Description
1. Equity oriented FOF Diversified FOF FOFs that invests in schemes which are
(Domestic) based on varied market caps e.g. large-cap,
mid-cap, Nifty 100, Nifty 50 etc are allowed
under this sub-category and these underlying
schemes should not be based on factors like
momentum, volatility, etc.
Sectoral FoF based on
/Thematic FOF  a single sector; or
 a single theme; or
 Multi-sector.
2. Debt oriented FOF These FoFs shall invest in domestic debt
(Domestic) oriented MF schemes based on
 different categories of debt schemes as
per paragraph 2.6 of Master Circular on
Mutual Fund dated June 27, 2024; or
 a single category of debt schemes as per
paragraph 2.6 of Master Circular on
Mutual Fund dated June 27, 2024.
3. Hybrid Investment in underlying Equity oriented
Aggressive
FoF(Domestic) schemes- 65% to 80%;
Hybrid FoF
Investment in underlying Debt oriented
schemes - 20% to 35%.
Investment in underlying Equity oriented
Conservative
schemes- 10% to 25%;
Hybrid FoF
Investment in underlying Debt oriented
schemes - 75% to 90%.
Investment in underlying Debt oriented
Income plus
schemes – up to 65%.
Arbitrage FOF
Balance investment in only arbitrage based
underlying schemes.
Investment in equity / debt oriented schemes
Dynamic Asset
that are managed dynamically
Allocation FoF
Investment in Equity oriented schemes, Debt
Multi Asset
oriented schemes + Commodity based
Allocation FoF
schemes* (and any other asset class based
scheme as permissible by SEBI from time to
time), subject to minimum investment of 10%
in each of the three categories of schemes.
*currently only gold and silver based passive
schemes are allowed to be launched under
commodity based schemes.
4. Commodity based Investment in commodity funds which invest
FoF(Domestic) in Gold and/or Silver or any other commodity
that may be permitted by SEBI from time to
time.
Equity oriented FOF (Overseas)
FOFs investing in overseas equity oriented
Country
schemes that provides exposure to the equity
specific Equity
markets of a particular country
FoF
FOFs investing in overseas equity oriented
Thematic/Sector
schemes that are based on a single
based Equity
theme/sector
FoF
FOFs investing in overseas equity oriented
5. Overseas FoF1 Region specific
schemes that provides exposure to the equity
Equity FoF2
markets of a particular region
Debt oriented FOF (Overseas)
FOFs investing in overseas debt oriented
Country
schemes that provides exposure to the debt
specific Debt
markets of a particular country
FoF
FOFs investing in overseas debt oriented
Region specific
schemes that provides exposure to the debt
Debt FoF2
markets of a particular region
6. Domestic and FOFs investing in domestic and overseas
Diversified
Overseas FOF1 equity oriented schemes which should not be
Equity FOF
based on the factors like momentum, quality,
etc.
Minimum investment in underlying domestic
and overseas schemes should be at least
35% each.
FoF investing in domestic and overseas
Sectoral
equity schemes based on
/Thematic
 a single sector; or
based Equity
 a single theme; or
FOF
 Multi-sector.
Minimum investment in underlying domestic
and overseas schemes should be at least
35% each.
FOFs investing in domestic and overseas
Debt oriented
debt oriented schemes.
FOF
Minimum investment in underlying domestic
and overseas schemes should be at least
35% each.
Note:
1. W.r.t Overseas FoFs, the AMC to take into account certain parameters such as liquidity
in such overseas funds, a certain threshold of collective AUM following the overseas
indices of such overseas funds, compliance of such indices with portfolio concentration
norms for passive indices etc.
2. List of regions for launch of Region specific FOFs is placed at Annexure I. Further, AMFI
in consultation with SEBI may define additional list of “regions” for Region specific FOFs.
3. Minimum investment in FOF schemes -95% of total assets (in line with the categorisation
circular). AMC has to ensure that the remaining portion of the investment shall not be in
contrast to the strategy of the scheme.
4. AMCs shall ensure that only those underlying overseas schemes are selected which have
exposure in securities as defined under Securities Contract (Regulation) Act, 1956 and
other applicable regulations/guidelines.
The AMC may launch schemes in each of the above mentioned categories of FoFs with multiple
underlying under the following three options:
a) Active option- FOFs investing in multiple active funds.
b) Passive option- FOFs investing in multiple passive funds.
c) Active and passive option - FOFs investing in multiple active and passive funds.
Benchmark
List of appropriate benchmarks that could be used by Mutual funds for the respective category of
FOF schemes is placed at Annexure II.
Nomenclature of FOF Schemes
The nomenclature of FOF schemes for each category of FOF schemes is placed at Annexure
III.
Number of FoFs permitted to be launched by an AMC
Number of FoF schemes permitted to the Mutual funds under above-mentioned categories of
FOF schemes is placed at Annexure IV.
If the number of existing FoF schemes of a Mutual fund under any particular category is more
than the number of FoFs permitted under the particular sub-category of FoF as mentioned at
Annexure IV, such FoFs will be grandfathered. However, Mutual fund will not be allowed to
launch more FoFs under that particular sub-category.
Re-categorisation of Existing FOF Schemes
Mutual funds are required to align/re-categorize their existing FoFs in one of the aforesaid sub-
category of FOF schemes by making necessary changes in the scheme attributes by August 31,
2025. In this regard, it is to be noted that such changes will not be considered as Fundamental
Attribute Changes (FAC).
Further, in case the number of existing FoFs of an AMC under any particular category/sub-
category is greater than or equal to the number of FoFs permitted under that category/sub-
category as mentioned in Annexure III:
a) The AMC may merge the existing FoF schemes falling under a category/sub-category to
reduce the number of FoFs under that category/sub-category in compliance with relevant
SEBI MF Regulations/ Circulars issued thereunder;
b) If the AMC is somehow not able to merge existing FoFs falling under a category/sub-
category due to scheme features, investment objective, etc., then such existing FoF
schemes may be grandfathered from the requirement of restricted number of FOFs in
particular category/sub-category based on request and rationale received from the
concerned AMC. Further AMCs while making the request for grandfathering for overseas
FOF category of schemes may also include distinct terminology in the scheme name for
the purpose of providing more clarity to the unitholders, such distinct term may include US
Treasury 1-3 year, NASDAQ, etc.
Annexure- I
Sr.No. Name of Regions
1 ASEAN
2 Europe
3 Asia
4 Asia Pacific
5 Africa
6 Middle East
7 North America
8 South America
9 Oceania/Australia
Annexure- II
S.No. Type of FoF Benchmark to be used
1 Equity oriented FOF (Domestic) NIFTY 500 TRI or S&P BSE 500 TRI or Tier 1 Benchmark for closely related to the Theme/factor
2 Debt oriented FOF (Domestic) NIFTY Composite Debt Index A-III or, CRISIL Dynamic Bond A-III Index or benchmark close to the duration/credit profile
Aggressive Hybrid FoF
Conservative Hybrid FoF
Tier 1 Benchmark – Hybrid category
Dynamic Asset Allocation FoF
Policy framework for Composition of Benchmark of Income Plus Arbitrage FoF
1) The benchmark should represent both debt and arbitrage schemes , in line with the weights under asset allocation of the schemes.
2) Additionally, the weightages of these benchmarks should be at least the minimum of the asset allocation range of that particular asset class.
3) AMCs are advised to use an appropriate combination of the broad indices that represent each asset class as mentioned below:
Broad Fixed Income Indices
NIFTY Short Duration Debt Index
3 Hybrid FOF(Domestic) NIFTY Composite Debt Index
CRISIL Short Term Bond Fund Index
Income Plus Arbitrage FOF CRISIL 10 year Gilt Index
CRISIL Composite Bond Fund Index
Arbitrage Fund Indices
NIFTY 50 Arbitrage
CRISIL Arbitrage Index
4) Additionally, AMCs need to ensure the following requirements:
a. While constructing the benchmark for a Income plus arbitrage FOF scheme, once a benchmark index is selected for underluing debt and arbitrage schemes the same should not be changed. For example – if for debt schemes, NIFTY Short Duration Debt Index is chosen, it should not be
changed on an ad-hoc basis by the AMC and may be changed only after following a due process including prior intimation/ approval of SEBI.
b. Likewise, once weights for underlying debt and arbitrage schemes for constructing the benchmark is decided by an AMC, the AMC may not change the weights without following due process including prior intimation/ approval of SEBI.
c. The weights of underluing debt and arbitrage schemes in the benchmark may be allotted suitably based on Scheme Information Document/ Investment Pattern of Scheme. For example, it should not happen that while the actual investment in debt by the scheme is generally 10%, the
benchmark weight for the debt index is 50%.
d. Further, the respective benchmark to be used for underluing debt and arbitrage schemes should be only from the aforesaid limited set of Indices mentioned hereinabove.
Multi Asset Allocation FoF Multi Asset- As per the policy framework for composition of benchmark of multi asset allocation fund category
Gold + Silver (or any other allowed Commodities)
4 Commodity based Weightages of these benchmarks should be at least the minimum of the investment range of that particular underlying fund.
FoF(Domestic)
5 Overseas FOF Benchmark of the underlying overseas MF schemes or broad market benchmark or weightages of these benchmarks should be at least the minimum of the investment range/duration/credit profile of that particular overseas underlying fund as per the SID.
6 Domestic and Overseas FOF Benchmark of the underlying overseas MF schemes or broad market benchmark or weightages of these benchmarks should be at least the minimum of the investment range/duration/credit profile of that particular overseas underlying fund as per the SID.
Annexure- III
Available Proposed Name
S. No. Type of FoF
Active option Passive option Active and Passive option
Equity oriented FOF(Domestic)
<<Name of Mutual Fund>> Diversified Equity <<Distinct Keyword>> Active FOF <<Name of Mutual Fund>> Diversified Equity <<Distinct Keyword>> Omni FOF
1 · Diversified FOF I l f a r t g h e e + in m ve id s c t a m p e o n r t f in le t x h ic e a u p n + d m e u r l l t y i i c n a g p s w ch il e l m be e s u s is e d ac . r H o o s w s u e p ve to r, 2 if c t a h p e s i n i.e ve . l s a t r m g e e n + t m in id t c h a e p u o n r d f e le rl x y i i c n a g p s + c m h u e l m tic e a s p is , t a h c e r n o s n s a m m o e r e o f t h th a e n u 2 n c d a e p r s ly t i h n a g n c a th p e s w i.e o . r d <<Name of Mutual Fund>>Diversified Equity <<Distinct Keyword>> Passive FOF I l f a r t g h e e + in m ve id s c t a m p e o n r t f in le t x h ic e a u p n + d m e u r l l t y i i c n a g p s w ch il e l m be e s u s is e d ac . r H o o s w s u e p ve to r, 2 if c t a h p e s i n i.e ve . l s a t r m g e e n + t m in id t c h a e p u o n r d f e le rl x y i i c n a g p s + c m h u e l m tic e a s p is , t a h c e r n o s n s a m m o e r e o f t h th a e n u 2 n c d a e p r s ly t i h n a g n c a th p e s i.e.
"all cap" will be used. word "all cap" will be used.
· Sectoral /Thematic FOF <<Name of Mutual Fund>> <<name of sector/theme/multi sector>> Active FOF <<Name of Mutual Fund>> <<name of sector/theme/multi sector>> Passive FOF <<Name of Mutual Fund>> <<name of sector/theme/multi sector>> Omni FOF
2 Debt oriented FOF(Domestic) Bas B e a d s e o d n F o d o n iv r s e E i r x n s a g if m l i e e p d d l e e d b e : t b D c t i a s c t t a i e n t g e c o t g r o K y e r y - y w < - < o < N r < d N a m c a o m e u e o ld f o M b f e M u ' t u S u t h a u o l a r F l o t u F r D n u d u n > r d a > > t > < io < d n n i v a + e m C rs r e i e f o d ie f i t d c R a d t i e s e b k g ' t o , < ' r O y < v D o e i f s r d t n i e i n g b c h t t t f K + u e L n i y q d w u > o > id r A ' d , c > e t > t i c v A . e c t F iv O e F F OF Base B d a o se n d d o iv n e s r i s n if g ie le d d d e e b b t t c c a a t t e e g g o o r r y y - - < < < < N N a a m m e e o o f f M M u u t t u u a a l l F o F u u r n n d d > > > > < d < i n ve a r m si e fi e o d f c d a e t b e t g o << ry D o is f t d in e c b t t K f e u y n w d o >> rd P > a > s s P iv a e s s F iv O e F FOF Bas B e a d s o e n d F d o o i n r v E e s x r in s a i g m fi le e p d l d e d e : b e D b t i t c s a c ti a t n e t c g e t g o K r o y e r y y - w - < o < < r N < d N a c m a o m u e e l o d f o b f M e M u ' u t S u h t a u o l a r F o l t u F r D u n u d n r d > a > > ti > < o < n d n i + v a e C m r r s e e if d o ie i f t d c R a d i t s e e k b g ' t , o ' < O r < y v D o e i r f s n t d i i e n g b c h t t t + K fu L e i n y q d w u > i o d > r ' , O d e > m t > c n O . i m F n O i F FOF
Hybrid FoF(Domestic)
· Aggressive Hybrid <<Name of Mutual Fund>> <<Aggressive Hybrid>> Active FOF <<Name of Mutual Fund>> <<Aggressive Hybrid>> Passive FOF <<Name of Mutual Fund>> <<Aggressive Hybrid>> Omni FOF
· Conservative Hybrid <<Name of Mutual Fund>><<Conservative Hybrid>> Active FOF <<Name of Mutual Fund>><<Conservative Hybrid>> Passive FOF <<Name of Mutual Fund>><<Conservative Hybrid>>Omni FOF
3
· Dynamic Asset Allocation <<Name of Mutual Fund>> <<Dynamic Asset Allocation>> Active FOF <<Name of Mutual Fund>> <<Dynamic Asset Allocation>> Passive FOF <<Name of Mutual Fund>> <<Dynamic Asset Allocation>> Omni FOF
· Income plus Arbitrage <<Name of Mutual Fund>> <<Income plus Arbitrage>> Active FOF <<Name of Mutual Fund>> <<Income plus Arbitrage>> Passive FOF <<Name of Mutual Fund>> <<Income plus Arbitrage>>Omni FOF
· Multi – Asset <<Name of Mutual Fund>> <<Multi – Asset>> Active FOF <<Name of Mutual Fund>> <<Multi – Asset>> Pssive FOF <<Name of Mutual Fund>> <<Multi – Asset>> Omni FOF
4 Commodity based FoF(Domestic) - <<Name of Mutual Fund>> <<Name of commodity/commodities >> Passive FOF -
Overseas FoF
· Country specific Equity FoF <<Name of Mutual Fund>> <<name of country>> specific Equity Active FOF <<Name of Mutual Fund>> <<name of country>> specific equity Passive FOF <<Name of Mutual Fund>> <<name of country>> specific Equity Omni FOF
· Thematic/Sector based Equity FoF <<Name of Mutual Fund>> <<name of theme/sector>> overseas Equity Active FOF <<Name of Mutual Fund>> <<name of theme/sector>>overseas Equity Passive FOF <<Name of Mutual Fund>> <<name of theme/sector>> overseas Equity Omni FOF
5
· Region specific Equity FoF <<Name of Mutual Fund>> <<name of region>>specific Equity Active FOF <<Name of Mutual Fund>> <<name of region>>specific Equity Passive FOF <<Name of Mutual Fund>> <<name of region>>specific Equity Omni FOF
· Country specific Debt FoF <<Name of Mutual Fund>> <<name of country>> specific Debt Active FOF <<Name of Mutual Fund>> <<name of country>> specific Debt Passive FOF <<Name of Mutual Fund>> <<name of country>> specific Debt Omni FOF
· Region specific Debt FoF <<Name of Mutual Fund>> <<name of region>> specific Debt Active FOF <<Name of Mutual Fund>> <<name of region>> specific Debt Passive FOF <<Name of Mutual Fund>> <<name of region>> specific Debt Omni FOF
Domestic and overseas FOF
<<Name of Mutual Fund>> domestic and overseas diversified equity<<Distinct Keyword>>Active FOF <<Name of Mutual Fund>> domestic and overseas diversified equity <<Distinct Keyword>>Omni FOF
· Diversified Equity FOF la If r g th e e + i m nv id e c s a tm p e o n r t f l i e n x t ic h a e p u + n m d u e l r t l i y c i a n p g w sc il h l e b m e e u s s e is d a . c H r o o w ss e u v p e t r o , i 2 f t c h a e p i s n i v .e e . s t la m rg e e n t + i m n i t d h c e a u p n o d r e f r l l e y x i i n c g a p sc + h m e u m lt e ic s a i p s , a t c h r e o n ss n m am or e e o t f h t a h n e 2 u c n a d p e s r l t y h i a n n g c th a e p s w i o .e r . d <<Name of Mutual Fund>> domestic and overseas diversified equity <<Distinct Keyword>>Passive FOF If t la h r e g i e n + ve m s i t d m ca e p n t o i r n f t le h x e i c u a n p d + e m rl u yi l n ti g c a s p c h w e i m ll e b s e i u s s a e c d ro . H ss o u w p e t v o e 2 r, c i a f p th s e i. e in . v la e r s g tm e + e m nt i d in c a th p e o u r n fl d e e x r ic ly a i p n + g m sc u h lt e i m ca e p s , i t s h a e c n r n o a ss m m e o o r f e t h th e a u n n 2 d e c r a l p y s in t g h a ca n p t s h i e . e.
"all cap" will be used. word "all cap" will be used.
6
· Sectoral /Thematic based Equity FOF <<Name of Mutual Fund>> domestic and overseas <<name of sector/theme/multi sector>> Active FOF <<Name of Mutual Fund>> domestic and overseas <<name of sector/theme/multi sector>> Passive FOF <<Name of Mutual Fund>> domestic and overseas <<name of sector/theme/multi sector>> Omni FOF
Debt oriented FOF Bas B e a d s o e n d F d o o i n v r e s E r i x n s a i g f m i le e p d d l e d e b e : b t D t c i s a c t a t i e n t g e ct g o r o K y e r y - y w - < < o < N r < d N a c m a o m e u e l o d f o b f M e M u ' u t S u t h a u o l a r F l o t u F r D u n u d n r d > a > > t > i < o < d n n i v + a e m C rs r e i e f o d ie f it d c R a d i t e s e b k g ' t , o < ' r O < y v D o e i f s r t d n i e i n g b c h t t t K f + u e L n i y q d w u > o i > d r ' A d , > c e t > t i c A v . e c t i F v O e F FOF Base B d a s o e n d d o iv n e s r i s n if g i l e e d d d e e b b t t c c a a t t e e g g o o r r y y - - < < < < N N a a m m e e o o f f M M u u t t u u a a l l F o F u u r n n d d > > > > < d < i n v a e m rsi e f i o e f d c d a e te b g t o < r < y D o is f t d in e c b t t K f e u y n w d> o > rd P > a > ss P iv a e s s F i O ve F FOF B B a a s s e e d d o o n n d s i i v n e g r l s e if i d e F e d o b r d t E e c x b a a t t m e c g a p o t l e r e y g : o - D r < y is < t - N i n < a c < m t N K e a e m o y f w e M o o u r f d t M u c a u o l t u F u l u d a n l b F d e u > n ' > S d d h > o o > m r d o t e o r D s m t u i r e c a s a t t n i i o c d n a o n + v d C e r o r s e v e d e a i r t s s < R e < a is n s k a d ', m i ' v O e e v r o e s f i r f c n i a e ig t d e h < g t < + o D L r i y i q s o u ti f i n d d c ' e , t e b K t t e c f y . u w n o d r > d > > O >O m m ni n i F F O O F F
Annexure- IV
Number of FoFs permitted to be launched by an AMC
S. No. Type of FoF
Active option Passive option Active and Passive option
Equity oriented
FOF(Domestic)
· Diversified FOF 2 2 2
1
Sector / themes- 1 scheme per sector/ Sector / themes- 1 scheme per Sector / themes- 1 scheme per sector/
· Sectoral /Thematic FOF theme sector/ theme theme
Multi Sector - 1 scheme Multi Sector- 1 scheme Multi Sector- 1 scheme
Debt oriented
2 2 2 2
FOF(Domestic)
Hybrid FoF(Domestic)
· Aggressive Hybrid 1 1 1
· Conservative Hybrid 1 1 1
3
· Dynamic Asset Allocation 1 1 1
· Income plus Arbitrage 1 1 1
· Multi – Asset 1 1 1
Commodity based
4 N.A 1 N.A
FoF(Domestic)
Overseas FoF
· Country specific Equity FoF 1 scheme per country 1 scheme per country 1 scheme per country
Sector / themes- 1 scheme per sector/ Sector / themes- 1 scheme per Sector / themes- 1 scheme per sector/
5
· Thematic/Sector based
theme sector/ theme theme
Equity FoF
Multi-Sector- 1 scheme Multi-Sector- 1 scheme Multi-Sector- 1 scheme
· Region specific Equity FoF 1 scheme per region 1 scheme per region 1 scheme per region
· Country specific Debt FoF 1 scheme per country 1 scheme per country 1 scheme per country
· Region specific Debt FoF 1 scheme per region 1 scheme per region 1 scheme per region
Domestic and overseas FOF
· Diversified Equity FOF 2 2 2
6 Sector / themes/multi-sector- 1
· Sectoral /Thematic based Sector / themes/multi-sector- 1 scheme Sector / themes/multi-sector- 1 scheme
scheme per sector/ theme/multi-
Equity FOF per sector/ theme/multi-sector per sector/ theme/multi-sector
sector
· Debt oriented FOF 2 2 2