The Securities and Exchange Board of India (SEBI) has overhauled mutual fund classifications, introducing life-cycle funds with tenures of 5–30 years while scrapping solution-oriented schemes. The move aims to ensure “true-to-label” offerings, strengthen investor protection, and align portfolios with long-term financial goals through automatic asset allocation shifts.
In a sweeping reform announced on February 26, 2026, the Securities and Exchange Board of India (SEBI) introduced life-cycle funds as a new category in mutual funds, while discontinuing solution-oriented schemes with immediate effect.
Life-cycle funds are designed to align investments with specific financial goals, automatically adjusting asset allocation as maturity approaches. SEBI’s circular also tightened disclosure norms, portfolio overlap rules, and valuation standards to enhance transparency and investor confidence.
Key Highlights
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New Category: Life-cycle funds with 5–30 year tenures
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Exit Loads: Graded structure to discourage early withdrawals
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Scrapped: Solution-oriented schemes discontinued immediately
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Portfolio Rules: AMCs can launch both contra and value funds if overlap <50%
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Valuation Norms: Gold and silver ETFs to follow domestic exchange prices
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Objective: Ensure “true-to-label” schemes, curb exaggerated return claims, and strengthen investor protection
This regulatory overhaul marks a defining shift in India’s asset management industry, simplifying long-term investing and reinforcing SEBI’s commitment to transparency.
Sources: Mint, The New Indian Express, MoneyControl, FINguide Buddy