SEBI’s New MF Categorization – Equity – Part 1
- There are more than 2000 MF’s in the market.
- Enable investors to evaluate different options available,to take an informal decision. Broader Classification 1. Equity Schemes 2. Debt Schemes 3. Hybrid Schemes 4. Sol. Oriented Schemes 5. Other Schemes In Terms Of Market Cap 1. Large Cap : 1st – 100th company 2. Mid Cap: 101st-250th company 3.Small Cap:251th company onwards ex: Large Cap – HDFC Top 200 – SIP BSE 200 Franklin India Blue Chip Fund -> Ist 99 companies of Nifty 500. Dynamic Bond Funds Debt Fund Classification – Average Maturity – Avg of maturities of instruments held by a fund. 1. Liquid Funds : 1 -90 days 2. Ultra Short Term Funds: 3-6 months 3.Short Term Funds: 6 -12 months 4. Medium Term Funds : 1-3 years 5. Long Term Funds: 3 years & more Bond Prices & Interest Rates are inversely propotional. If bond price increases then interest rate decreases & if bond price decreases then interest rate increases. Dynamic Bond Funds have the flexibility to switch from longterm maturity instruments to short term maturity instruments and vice – versa. Hence, can take advantage of interest rate movement in any direction. For which average maturity is to be expected. ex:- HDFC High Interest Fund – Dynamic Plan. Increasing Interest Rate View : July 2013- Avg Mat : 5.65 years Decreasing Interest Rate View : Oct 2017- Avg Mat : 10.12 years Fund performance highly depends upon fund manager’s ability. A good fund manager can gauge Interest Rate Scenario. He can spot good quality bonds.To earn accrual income & capital gains. It can be difficult to align investment duration of your goal with avg. maturity of these funds. Returns in 1 year ~ 4 %, 3 years ~ 8 %.