Classification of Mutual Funds By the management of the portfolio
- M Manohar Rao
- Jul 17
- 3 min read
Tags: Wealth Management, Investment Lesson, Mutual Funds, Mutual Fund Basics, Stock market, Budget, Finance, Investing, Personal Finance, Investment, ETFs, SIP, Multi cap
Actively managed funds are funds where the fund manager has the flexibility to choose the investment portfolio, within the broad parameters of the investment objective of the scheme. Since this increases the role of the fund manager, the expenses for running the fund turn out to be higher. Investors expect actively managed funds to perform better than the market.
Passive funds invest on the basis of a specified index; whose performance it seeks to track. Thus, a passive fund tracking the S&P BSE Sensex would buy only the shares that are part of the composition of the S&P BSE Sensex. The proportion of each share in the scheme’s portfolio would also be the same as the weightage assigned to the share in the S&P BSE Sensex. Thus, the performance of these funds tends to mirror the concerned index. They are not designed to perform better than the market. Such schemes are also called index schemes. Since the portfolio is determined by the index itself, the fund manager has no role in deciding on investments. Therefore, these schemes have low running costs.
As on December 31, 2024, SEBI has introduced Mutual Fund Lite framework for passively managed schemes of mutual funds. Mutual fund Regulation defines “MF Lite” as a mutual fund that is having only such index funds, exchange traded funds, fund of funds or other mutual fund schemes as may be specified by SEBI from time to time.
Further, MF Lite scheme is defined as any scheme launched by an MF Lite or any other eligible passive scheme as may be specified by SEBI from time to time.
Disclaimer:
The information set out above is included for general information purposes only and is not exhaustive and does not constitute legal or tax advice. All complaints regarding Mutual Fund can be directed towards visit www.scores.gov.in (SEBI SCORES portal). Readers are requested to make informed investment decisions and consult Chaitanya Financial Consultants – 9000628943 / mfd.mmr@gmail.com to determine the financial implications with respect to investing in Mutual Funds.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Join WhatsApp group for better and personalised communication regarding investment lessons, advice and help.
Note: Members of our WhatsApp group will enjoy lifetime free investment advice and will not be charged any consultation fee for mutual fund investments.
Support My Mission – Your Small Contribution Matters!
I am passionate about sharing financial knowledge and guiding people toward financial independence. Through my articles, I strive to provide valuable insights that can help you make smarter investment decisions and secure your future.
If my work has added value to your financial journey, I would truly appreciate your support. A small contribution from you—whatever amount you feel is right—will go a long way in motivating me to continue creating high-quality content.
💰 You can support me via:
✔ Paytm / Google Pay / Amazon Pay: 9000628943
✔ PayPal: manomatt@rediffmail.com
Every small payment is not just financial support—it’s an encouragement that fuels my passion for educating and empowering others. Thank you for being a part of this journey! 🙏
Here’s your chance to earn extra money effortlessly. Simply refer someone to invest in any mutual fund scheme, and as soon as they invest, you'll receive ₹50 - ₹100 instantly in your bank account via Paytm or PhonePay. Start referring and start earning today!
Comments