SEBI Guidelines – For Investing in Mutual Funds

Part 3

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SEBI Guidelines – For Investing in Mutual Funds-Part3


Talking about mutual funds, SEBI acts as a deciding person that set the policies for mutual funds, also regulates the industry. In short, laying guidelines for the mutual fund for safeguarding the interest of the investor(s).  

A Bit More: 

Mutual funds are considered as distinct in terms of their asset allocation activities and investment strategy. This brings-in the smooth functioning of the mutual funds, thus, assisting the investors in taking decision. To facilitate the same, mutual funds have been categorized as: 

  • Equity Schemes 
  • Hybrid Schemes 
  • Debt Schemes 
  • SolutionOriented Schemes 
  • Other Schemes 

The rationalization and categorization of mutual funds into the above-mentioned categories ensures that mutual funds houses will be having one scheme in every sub-category, with a few exceptions. This will help in simplifying the selection of mutual funds and also helps in making things work in the right direction in the rightful scheme.  


  • Categorization of five schemes into five categories: Equity, Hybrid, Debt, Solution-Oriented Schemes and others. 
  • There is lock-in-period specifically for solution-oriented schemes. 
  • To ensure uniformity – small, mid and large cap has been properly defined. 
  • Permission of only one scheme in every category (except for Exchange Traded Funds/Index Funds, Funds of Funds, Thematic/Sectoral Funds).  


Listed below: 

  • Accessing Personal FinancesMutual funds carry the more diversified form of investment along with some risk. Investors must be sure in their financial assessment and risk bearing capacity in the event of poor performance. Therefore, investors must consider their risk-appetite related with the investment schemes.  
  • Diversifying the PortfolioThis allows investors to spread their investment over different schemes, thus, increasing chances of mitigating risk or maximizing profits. Diversification is crucial for sustainable financial advantage and gaining long-term. 
  • Depth of InformationBefore venturing into the mutual fund, it is important as an investor to gather detailed information about the mutual fund scheme you are opting for. Having the rightful information is the key to making reliable investments.  
  • Avoiding the Portfolio ClutterChoosing the right fund requires monitoring and managing the fund schemes individually with care. The investor must avoid cluttering the portfolio and also decide on the number of schemes to hold-on to avoid any sort of overlapping.  
  • A Timely DimensionIt is advised for the investor(s) to assign a certain time-frame for each mutual fund scheme. It may help in containing the fluctuations and volatility in the market only if the plans are maintained stably over a time-period.  

Not sure of the right mutual fund scheme? Gulaq can help summarizing this for you. 

With so many funds available along with the changes, it can be tedious for a new investor to keep up-to-date. This is where Gulaq comes to the rescue. Get in touch.  


Also Read, SEBI Guidelines-Part 1 & SEBI Guidelines Part 2

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