Mutual fund schemes broadly reclassified into 5 categories under the 2026 Regulations
Following the SEBI (Mutual Funds) Regulations, 2026, schemes are now classified at the top level into Equity, Debt, Hybrid, Life Cycle Funds, and "Other Schemes" (Fund of Funds, passive schemes like Index Funds/ETFs) — the umbrella structure a distributor should map every sub-category (multi cap, flexi cap, etc.) against.
“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 the Board (d) Life Cycle Funds (e) Other Schemes: (i) Fund of Fund Schemes (ii) Passive Schemes for e.g. Index Funds/ ETFs”
A distributor recommending a Fund of Funds that invests across two different domestic equity indices needs to know it does not fall under the light-touch 'Other Schemes → Passive' bucket reserved for single-index trackers — it's classified under the standard scheme rules instead, which matters when comparing its costs against true passive peers.
Illustrative scenario written by Northspread — not text from the circular itself.