Under the SEBI Mutual Fund Regulations, what are the permissible tenure parameters and scheme offering limits for Life Cycle Funds?

[ A ]Fixed tenure of exactly 1 year with unlimited simultaneous fund offerings per AMC

[ B ]Minimum tenure of 5 years and maximum tenure of 30 years (in multiples of 5 years), with at most 6 active funds per AMC[ CORRECT ]

[ C ]Minimum tenure of 10 years with no ceiling on tenure and a maximum of 2 active funds per AMC

[ D ]Perpetual open-ended tenure without maturity dates and a maximum of 12 active funds per AMC

Takeaway

Option B is correct: Minimum tenure of 5 years and maximum tenure of 30 years (in multiples of 5 years), with at most 6 active funds per AMC

Derivation

SEBI regulations allow AMCs to launch Life Cycle Funds following a pre-determined glide-path strategy across asset classes (Equity, Debt, InvITs, ETCDs, Gold & Silver ETFs). These funds must have a minimum tenure of 5 years and a maximum tenure of 30 years, launched in multiples of 5 years (e.g., 5, 10, 15, 20, 25, 30 years). A maximum of 6 Life Cycle Funds can be active for subscription by an AMC at any point in time. This question tests candidate mastery of new category rules. A common error is assuming Life Cycle Funds are perpetual open-ended funds.

Why the others fail

A — Fixed tenure of exactly 1 year with unlimited simultaneous fund offerings per AMC

A 1-year tenure is impermissible as Life Cycle Funds require a minimum 5-year multi-asset glide path and have a 6-fund cap.

C — Minimum tenure of 10 years with no ceiling on tenure and a maximum of 2 active funds per AMC

Life Cycle Funds have a defined 30-year maximum ceiling and permit up to 6 active funds rather than just 2.

D — Perpetual open-ended tenure without maturity dates and a maximum of 12 active funds per AMC

Life Cycle Funds possess structured target maturities rather than perpetual open-ended structures and are limited to 6 active funds.