SEBI Scraps 44 Mutual Fund Schemes; ₹57,000 Cr Shift Sparks Big Investor Confusion

In a major reform, SEBI has decided to discontinue around 44 “solution-oriented” mutual fund schemes, including children and retirement funds, involving nearly ₹57,000 crore of investor money. The move is aimed at simplifying the mutual fund structure and removing confusion among investors. These funds were often perceived as safer due to their labels, but in reality, they carried similar risks as other equity-oriented funds. SEBI found significant overlap in portfolios and misleading categorization, prompting this clean-up action. Importantly, investor money is not at risk. Existing investments will either be merged into other suitable schemes like flexi-cap or multi-cap funds, or remain in a frozen state where no new investments are allowed, but redemption is open anytime. SEBI is also pushing a new structure called “Life Cycle Funds,” where asset allocation automatically adjusts based on age and investment horizon. The reform is seen as a step toward making India’s mutual fund industry more transparent, simple, and investor-friendly.