L&T Financial Services has proposed re-categorization of mutual funds to The Securities and Exchange Board of India (SEBI) for various schemes. The changes have come into place due to a recent circular by the regulator, SEBI, to rationalize the existing mutual fund schemes.

The reason for this rationalization is to simplify the investing and decision-making process for common investors.
SEBI proposed Categorization and Rationalization of All Mutual Fund Schemes, which all fund houses must adhere to.

Changes in the Scheme Names of L&T Mutual Fund

Old NameNew NameOld CategoryNew Category
L&T Arbitrage Opportunities FundL&T Arbitrage Opportunities FundEquity-ArbitrageHybrid-Arbitrage
L&T Banking & PSU Debt FundL&T Banking & PSU Debt FundDebt-Ultra Short TermDebt-Banking & PSU
L&T Business Cycles FundL&T Business Cycles FundEquity-DiversifiedEquity-Sectoral/Thematic
L&T Cash FundL&T Cash FundLiquid-LiquidDebt-Overnight
L&T Dynamic Equity FundL&T Dynamic Equity FundDynamic/Asset Allocation-Dynamic/Asset AllocationHybrid-Dynamic Asset Allocation
L&T Emerging Businesses FundL&T Emerging Businesses FundEquity-DiversifiedEquity-Small Cap
L&T Equity FundL&T Equity FundEquity-DiversifiedEquity-Multi Cap
L&T Equity Savings FundL&T Equity Savings FundHybrid-Debt OrientedHybrid-Equity Savings
L&T Flexi Bond FundL&T Flexi Bond FundDebt-IncomeDebt-Dynamic
L&T Floating Rate FundL&T Money Market FundDebt-Floating Rate FundDebt-Money Market
L&T Gilt Plan InvestmentL&T Gilt FundDebt-GiltDebt-Gilt
L&T Income Opportunities FundL&T Credit Risk FundLiquid-LiquidDebt-Overnight
L&T Income Opportunities FundL&T Credit Risk FundDebt-IncomeDebt-Credit Risk
L&T India Large Cap FundL&T India Large Cap FundEquity-DiversifiedEquity-Large Cap
L&T India Special Situations FundL&T Large and Midcap FundEquity-DiversifiedEquity-Large & Mid Cap
L&T India Value FundL&T India Value FundEquity-DiversifiedEquity-Value
L&T Infrastructure FundL&T Infrastructure FundEquity-SectorEquity-Sectoral/Thematic
L&T Liquid FundL&T Liquid FundLiquid-LiquidDebt-Liquid
L&T Midcap FundL&T Midcap FundEquity-DiversifiedEquity-Mid Cap
L&T Monthly Income PlanL&T Conservative Hybrid FundDebt-MIPHybrid-Conservative
L&T Resurgent India Corporate Bond FundL&T Resurgent India Bond FundDebt-IncomeDebt-Medium Duration
L&T Short Term Income FundL&T Low Duration FundDebt-Short TermDebt-Low Duration
L&T Short Term Opportunities FundL&T Short Term Bond FundDebt-Short TermDebt-Short Duration
L&T Tax Advantage FundL&T Tax Advantage FundEquity-Tax PlanningEquity-ELSS
L&T Taxsaver FundMerged with L&T Tax Advantage FundEquity-Tax – ELSSEquity-ELSS
L&T Triple Ace Bond FundL&T Triple Ace Bond FundDebt-IncomeDebt-Corporate Bond
L&T Ultra Short Term FundL&T Ultra Short Term FundDebt-Ultra Short TermDebt-Ultra Short Duration

All unitholders of relevant schemes shall be notified about the change in name, category or any other changes in the fund, whatsoever.

What Will Be the Impact on Investors?

From the perspective of a common retail investor, the new categorization and rationalization process will increase transparency in the investing process. It will empower investors by eliminating confusion in the identification of the mutual fund categories as well.

Moreover, it is expected that the new measure will simplify decision making and selection of funds for all investors.

Here Are Few Characteristics that Might Develop After Recategorization:

  1. Schemes might merge or combine with each other
  2. Your expense ratio might come down because of higher AUM per scheme
  3. The number of schemes will reduce

Mutual Fund and Category Change

Mutual fund category explains where and in what proportion the fund will invest in assets under management (AUM) and in what proportion. Therefore, in the process of rationalization, if there is a change in category of mutual funds, an investor must keep track of the change.

This will enable him/ her to change the strategy of investment in these mutual funds, if required. It is recommended to contact the advisor if one faces any issue or doubt over any of the re-assessed categories of funds.

Know More: New Mutual Fund Rules by SEBI: Categorization and Rationalization Of Mutual Fund Schemes

What Is the Reason for Re-Categorization?

Securities Exchange Board of India (SEBI) recently came up with a circular instructing re-categorization and rationalization of all mutual funds schemes. Basically, SEBI wants to reduce confusion for investors and simplify the decision-making process, around selection and identification of mutual funds.

As per the new circular, one mutual fund company can have only one scheme under each category. Thus, all Mutual Fund Houses are renaming, re-categorizing, and merging mutual funds as per the directives of SEBI. In abidance with the circular, L&T Mutual Fund has also re-categorized its mutual fund schemes.

Read More: The 30 Best Mutual Funds to Invest in 2018 – Groww 30.

Happy investing!

Disclaimer: The views expressed here are that of the author and do not reflect those of Groww.