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Economy News

News on Indian Economy and Sectors, which have impacts in the market.

 
SEBI broadens MF categories, introduces life cycle funds
27-Feb-26 10:48Hrs IST

Market regulator Securities Exchange Board of India or SEBI has introduced another new category of mutual funds called the life cycle fund. SEBI said that life cycle funds will have a minimum duration of five years and a maximum duration of 30 years. Asset management companies can now introduce mutual fund schemes investing in debt instruments of companies in specific sectors. A sectoral fund would have a minimum investment of 80% in debt and debt related instruments of a particular sector across duration. The investment would be listed only in corporate bonds with a credit rating of more than AA+.

SEBI has scrapped the solution-oriented schemes category and tightened disclosure and portfolio-overlap norms as part of a revamped classification framework.

SEBI also mentioned the Sectoral Debt Funds may be launched in Financial Services, Energy, Infrastructure, Housing, Real Estate. In addition to the introduction of the new category, SEBI also said that the residual investment in long duration funds can be invested in InvITS. This is on the condition that the stocks that are not more than 50% of the stocks in a sectoral debt fund can overlap with any other equity fund, the circular read.

SEBI now allowed mutual funds to invest the residual portion of an equity scheme to in equity, money market instruments and other liquid instruments, gold and silver instruments as permitted by SEBI and in InvITs. In equity schemes, the overall between sectoral and thematic funds were fixed at 50% except for large caps. The market regulator gave three years for AMCs to comply to the overlap condition for the new fund.

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