An open-ended mutual fund scheme invests at least 65% of its assets in equity and equity-related instruments in order to exploit arbitrage opportunities. Under SEBI's categorisation of mutual fund…
Question and options
An open-ended mutual fund scheme invests at least 65% of its assets in equity and equity-related instruments in order to exploit arbitrage opportunities. Under SEBI's categorisation of mutual fund schemes as revised in February 2026, in which broad group is it placed?
Hybrid schemes
Debt schemes
Equity schemes
Other schemes
Answer and explanation
Correct answer: A - Hybrid schemes
SEBI's categorisation of mutual fund schemes, revised by its circular of 26 February 2026, places the arbitrage fund among hybrid schemes, with a minimum of 65% in equity and equity-related instruments. The equity exposure tempts students to call it an equity scheme, but its hedged arbitrage positions make it a hybrid category. Index funds, exchange-traded funds and funds of funds fall in the 'other schemes' group.
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