All mutual fund schemes within a fund house will need to be appropriately distinct from each other in terms of strategy, asset allocation, etc.

There are two basic ways to earn money — by working and by making your assets work for you. The latter is an idea that each one of us thinks about once we start earning  — choosing the right investment strategy assumes paramount importance. As is has been rightly said by Ben Graham, noted American investor & 'the father of value investing', "The individual investor should act consistently as an investor and not as a speculator."

In India, the influx of the domestic investors' money in equity markets (mutual funds) has been increasing significantly over the past few years.

You can start investing in mutual funds from as little as Rs. 500. Should you need help finding the right fund, a simple Google search for a good largecap equity funds would throw up numerous possibilities.

But unfortunately, for many first-time investors, having to choose from the plethora of equity funds, all claiming to outperform the index and the benchmark, is like finding a needle out from what seems like a haystack of schemes available and registered with the Securities & Exchange Board of India (SEBI). To simplify this, SEBI on October 6th, 2017, released new guidelines on categorizing mutual funds, asking funds to classify their schemes under five clearly defined categories.

These categories are classified as Equity Schemes, Debt Schemes, Hybrid Schemes, Solution Oriented Schemes and Other Schemes. Fund houses will be allowed to have one scheme in each category, except for Index funds/ETFs tracking indices, fund of funds and thematic schemes investing in different sectors.

Additionally, all mutual fund schemes within a fund house will need to be appropriately distinct from each other in terms of strategy, asset allocation, etc. If a fund house currently has more than one fund in the same category, they will necessarily need to be merged into one. As of now, fund houses will have to analyze each of their existing schemes, obtain approvals from their trustees and submit their proposed course of action (whether a scheme will be merged, wound up or its fundamental attributes will be changed) to the regulator within the next two months. After SEBI issues its observations on the fund house's proposals, the necessary changes will have to be carried out within three months.