SEBI mandates that mutual fund schemes invest according to their category classification, ensuring transparency and helping investors make informed choices.
Large-Cap Funds
Must invest at least 80% of assets in large-cap stocks (top 100 companies by market cap)Objective: Capital appreciation with lower risk
Mid-Cap Funds
Must invest at least 65% of assets in mid-cap stocks (101st to 250th companies)
Objective: Growth with moderate risk
Small-Cap Funds
Must invest at least 65% of assets in small-cap stocks (251st company onwards)
Objective: High growth potential with higher risk
Multi-Cap Funds
Must invest at least 25% each in large, mid, and small-cap stocks for diversification
Objective: Balanced exposure across market segments
These regulations ensure fund managers adhere to stated investment objectives and help investors align their portfolios with their risk profiles and financial goals.