{"id":1329,"date":"2026-06-05T09:46:52","date_gmt":"2026-06-05T09:46:52","guid":{"rendered":"https:\/\/maxiomassetmanagement.com\/blog\/?p=1329"},"modified":"2026-06-05T09:46:57","modified_gmt":"2026-06-05T09:46:57","slug":"sebi-mutual-fund-regulations-2026-what-changed","status":"publish","type":"post","link":"https:\/\/maxiomassetmanagement.com\/blog\/sebi-mutual-fund-regulations-2026-what-changed\/","title":{"rendered":"SEBI’s New Mutual Fund Regulations Are Live: What Changed from April 1, 2026"},"content":{"rendered":"

SEBI notified the Securities and Exchange Board of India (Mutual Funds) Regulations, 2026 in January 2026, with the new rules coming into full force from April 1, 2026. These are the most comprehensive changes to the mutual fund regulatory framework since the 2018 re-categorisation exercise, and they affect everything from how fund expenses are disclosed to which types of funds can be offered. If you hold mutual funds <\/a> – directly or through a distributor – here is a plain-language summary of what actually changed and whether you need to do anything.<\/p>\n\n

What Changed in How Fund Expenses Are Disclosed?<\/h2>\n\n

The most significant operational change is the shift from the existing Total Expense Ratio (TER) model to a new Base Expense Ratio (BER) model. Under the old system, one TER figure was published, which combined the fund manager’s actual management fee with other costs like brokerage, securities transaction tax, and exchange fees. From April 2026, these costs are separated. The BER reflects only the AMC’s fee for managing your money, while other transaction costs are disclosed separately.<\/p>\n\n

In practical terms, this change does not reduce your overall cost immediately, but it gives you much clearer visibility into what the fund house charges versus what goes to market transaction costs. Investors comparing two funds can now see whether a difference in reported expense is a genuine fee difference or just a brokerage and transaction cost difference, which is useful information that was previously bundled together.<\/p>\n\n

Alongside this, SEBI has sharply reduced brokerage caps. Cash market brokerage caps were cut from 12 basis points to 6 basis points, caps apply within defined execution frameworks; actual costs may vary based on liquidity and strategy. and derivative brokerage caps from 5 basis points to 2 basis points. SEBI also removed the additional 5 basis point allowance that was linked to exit-load schemes. These reductions will lower the transaction cost component of fund expenses over time, which should benefit investors in actively traded funds.<\/p>\n\n

Which Fund Categories Have Been Removed or Added?<\/h2>\n\n

The Solution-Oriented category, which included Retirement Funds and Children’s Funds, has been removed from the mutual fund framework. Existing schemes in this category have stopped accepting fresh subscriptions. Investors already holding units in these schemes are not affected immediately and can continue to hold or redeem as usual, but new investments into these fund types are no longer possible.<\/p>\n\n

In place of Solution-Oriented funds, SEBI has introduced Life Cycle Funds – a more structured approach to long-horizon investing. These funds use a glide path design, meaning they automatically reduce equity allocation and increase debt allocation as the target year approaches. This is similar to the Target Date Fund structure common in US retirement accounts. The idea is that the fund’s asset mix becomes progressively conservative as the investor nears their goal, without requiring the investor to make that rebalancing decision manually.<\/p>\n\n

If you were investing in a Retirement Fund through the SIP route and it was in the Solution-Oriented category, your fund house will communicate the transition plan. Typically, existing AUM will be merged into a comparable scheme or the fund will continue operating for existing investors but close to new subscriptions. Check your fund house’s communication if you hold such a scheme.<\/p>\n\n

What Are the New Rules on Portfolio Overlap Between Funds?<\/h2>\n\n

SEBI has introduced portfolio overlap limits between certain fund categories, a change aimed at ensuring that different schemes from the same AMC are genuinely distinct. Value funds and Contra funds, which are both allowed to exist within a fund house, cannot have more than 50% portfolio overlap with each other. Similarly, thematic equity schemes must limit overlap with other thematic or equity categories to 50%,(overlap measured based on portfolio weight similarity across schemes) with an exception for large-cap funds.<\/p>\n\n

Why does this matter for investors? It prevents the situation where two supposedly different funds from the same AMC end up holding nearly the same stocks, giving investors false diversification. If you hold both a Value Fund and a Contra Fund from the same AMC believing they provide different market exposures, these new rules ensure that is actually the case from April 2026 onward. AMCs have been given time to restructure portfolios that exceeded these overlap thresholds.<\/p>\n\n

Can Equity Funds Now Invest in Gold and Silver?<\/h2>\n\n

Yes, within limits. Actively managed equity funds may now invest their residual portion – up to 35% of the portfolio – in gold, silver instruments, and units of Infrastructure Investment Trusts (InvITs). This is a meaningful expansion of what equity funds could previously do. The primary equity mandate remains unchanged; this flexibility applies to the non-core portion of the fund.<\/p>\n\n

From an investor’s perspective, this could mean that an equity fund you hold for pure equity exposure starts allocating a portion to gold or InvIT units, depending on the fund manager’s view. This may improve diversification and reduce portfolio volatility in certain market conditions, but it also means the fund’s performance will increasingly reflect non-equity factors. Reading the updated Scheme Information Document (SID) for your equity funds, if they plan to use this flexibility, is worthwhile.<\/p>\n\n

Has the Regulatory Document Been Simplified?<\/h2>\n\n

One of the less-noticed but substantive changes is that the master regulations themselves have been significantly streamlined. The new SEBI (Mutual Funds) Regulations 2026 runs to approximately 88 pages and 31,000 words, compared to the previous 162 pages and 67,000 words. SEBI has moved operational circulars into a separate Master Circular, keeping the principal regulation focused on core principles and investor protection.<\/p>\n\n

For most retail investors, this simplification is background information rather than something actionable. That said, it reflects SEBI’s broader effort to make regulations more readable and reduce compliance ambiguity for fund houses, which should translate to cleaner and more consistent disclosures for investors over time.<\/p>\n\n

What Do You Need to Do as an Investor?<\/h2>\n\n

For most mutual fund investors, the April 2026 changes do not require any immediate action. Your existing SIPs continue unaffected. Your existing fund holdings continue to be managed under the updated framework. The changes to expense disclosures will be reflected in AMC communications and updated SIDs going forward.<\/p>\n\n

Three things are worth doing proactively. First, if you hold any scheme that was in the Solution-Oriented category, check your AMC’s communication about what happens to your investment – whether it is being merged into another scheme or remaining as a closed fund. Second, if you hold both a Value Fund and a Contra Fund from the same AMC, review whether the AMC has communicated any portfolio restructuring under the new overlap rules. Third, when comparing expense ratios across funds after April 2026, note that figures will now reflect the new BER-based disclosure, so direct comparisons with pre-April TER figures will need adjustment.<\/p>\n\n

To sum up, SEBI’s new mutual fund regulations from April 2026 represent a genuine improvement in investor transparency – lower brokerage caps, cleaner expense disclosure, and clearer fund category boundaries. The removal of Solution-Oriented funds and their replacement with Life Cycle Funds affects a specific segment of investors. The new portfolio overlap rules protect investors from false diversification across schemes. None of these changes require panic or portfolio restructuring, but staying informed about how your specific fund house is implementing these rules is a reasonable and low-effort step.<\/p>\n\n

Frequently Asked Questions<\/h2>\n\n

When did SEBI’s new mutual fund <\/a> regulations come into effect?<\/strong> The SEBI (Mutual Funds) Regulations 2026 were notified in January 2026 and came into force from April 1, 2026. These replace and consolidate the previous regulatory framework.<\/p>\n\n

What happened to Retirement <\/a> Funds and Children’s Funds?<\/strong> These were part of the Solution-Oriented category that SEBI has removed from the framework. Existing schemes in this category have stopped accepting fresh subscriptions from April 2026, but existing investors can continue holding or redeeming their units.<\/p>\n\n

What is the difference between the old TER and the new BER?<\/strong> The Total Expense Ratio (TER) bundled the AMC’s management fee with transaction costs like brokerage and STT. The new Base Expense Ratio (BER) shows only the AMC’s management fee, with other transaction costs disclosed separately, giving investors a clearer breakdown of where their money goes.<\/p>\n\n

Can equity mutual funds now invest in gold?<\/strong> Yes. From April 2026, actively managed equity funds may invest up to 35% of their portfolio in gold, silver instruments, and InvIT units, though the primary equity mandate remains unchanged and this flexibility applies to the residual non-core portion.<\/p>\n\n

Where can I read the full SEBI Mutual Funds Regulations 2026?<\/strong> The full text of the regulations is available on the SEBI website at sebi.gov.in under the Legal Regulations section. The new regulations run approximately 88 pages, significantly shorter than the previous 162-page version.<\/p>","protected":false},"excerpt":{"rendered":"

SEBI notified the Securities and Exchange Board of India (Mutual Funds) Regulations, 2026 in January 2026, with the new rules coming into full force from April 1, 2026. These are the most comprehensive changes to the mutual fund regulatory framework since the 2018 re-categorisation exercise, and they affect everything from how fund expenses are disclosed… Read More »SEBI’s New Mutual Fund Regulations Are Live: What Changed from April 1, 2026<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":1331,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[138,139,136,137,135],"class_list":["post-1329","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-outlook","tag-expense-ratio-ber","tag-life-cycle-funds-india","tag-mutual-fund-regulations-india","tag-sebi-investor-awareness","tag-sebi-mutual-funds-2026"],"_links":{"self":[{"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/1329","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=1329"}],"version-history":[{"count":5,"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/1329\/revisions"}],"predecessor-version":[{"id":1338,"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/1329\/revisions\/1338"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/media\/1331"}],"wp:attachment":[{"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=1329"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=1329"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/maxiomassetmanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=1329"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}