In its quest to tighten the nomenclature of a mutual fund (MF) scheme’s name, Sebihas asked fund houses to modify the names of their schemes, as per the newly modified names of the categories. The Long Duration Fund will now be called the Long Term Fund. Likewise, the Short Duration Fund will now be called the Short Term Fund.
While it is understood by investors that short-duration or tenured funds are typi cally debt and liquid, confusion may arise if an investor unfamiliar with the Long Term Fund assumes it is an equity fund. For instance, HDFC Long Duration Debt Fund has now been renamed to HDFC Long Term Fund. Bandhan Long Duration Fund has been renamed to Bandhan Long Term Fund. “This is bound to create some confusion in the minds of investors when they go in search of a suitable ‘long-term’ fund for their long-term goals. Their search ought to lead them to equity funds since equity is the best asset class for the long-term, but here, the long-term fund is a debt fund,” says the head of products at a large asset management company, who did not wish to be identified.
Another former debt fund manager, now a senior executive at a finance firm, says there was logic behind Sebi’s move to ask fund houses to modify their names. This executive tells us that earlier investors were confused about whether the ‘long du ration’ referred to the timeline that inves tors were meant to hold on to that fund for optimal results or whether that denoted the long-term nature of the scheme’s un derlying securities.
Amol Joshi, Founder, Plan Rupee Investment Services, says that ideally, a fund’s name should indicate whether it’s an equity or a debt fund. “But Sebi has also ensured that the equity funds are called as per what they are supposed to do and where they invest. So that ought to offset any confusion that might occur in an in vestor’s mind.” But he adds that the Long Term fund might confuse the DIY (Do It Yourself) investor who, say, is investing in MFs for the first time.
Sebi clean-up
In a bid to standardise mutual fund names and reduce duplication, Sebi undertook a massive exercise in 2017 to rename the categories. It asked fund houses to ensure they had only one scheme per category and that scheme names reflected the category’s name, rather than the fancy, flashy names many schemes in those days used, which made them look more dynamic and exaggerated. In 2017, Sebi identified 36 categories, which went up to 40 in February 2026.
Siliguri-based mutual fund distributor Prabin Agarwal points out that some tax saving or equity-linked savings schemes were earlier called ‘long-term funds’. In 2017, Sebi mandated the ELSS label. “Wherever the word ‘debt’ has been re moved from debt fund categories, it might become a bit misleading,” he says.