The Securities and Exchange Board of India (SEBI) has decided to discontinue the solution-oriented mutual fund category, which includes children’s and retirement funds. This move is part of a major overhaul of mutual fund categorisation rules aimed at enhancing clarity and transparency for investors. Existing schemes in this category will no longer accept fresh subscriptions and will be merged with similar schemes, subject to SEBI’s approval.
As of January 31, 2026, there were 15 schemes in the children’s fund category and 29 schemes in the retirement fund category. SEBI had initially proposed these changes in July 2025 to address issues like portfolio overlap and to introduce new schemes for better clarity. The regulator emphasized that mutual funds should offer different types of schemes in the solution-oriented category with suitable asset allocation for the scheme’s objective.
In its latest circular issued on February 26, SEBI introduced new categories like contra funds and sectoral debt funds. Additionally, goal-based life cycle funds were included, and asset management companies (AMCs) were directed to align their existing schemes with the new framework within six months. SEBI has also set limits for launching Fund of Funds (FoFs) to enhance discipline in product offerings.
Nikunj Saraf, CEO at Choice Wealth, praised SEBI’s new mutual fund classification rules as a significant step towards simplifying the industry for retail investors.
