MUMBAI, Feb. 27 -- The Securities and Exchange Board of India (Sebi) has tightened mutual fund rules to curb look-alike schemes and reduce portfolio overlaps, in a move aimed at making fund choices clearer for investors and pushing fund managers to differentiate their products.

In a circular issued on Thursday, the market regulator capped portfolio overlaps across several categories, reshaped parts of mutual fund classification, discontinued solution-oriented schemes, and introduced two new products - life cycle funds and sectoral debt funds.

The move follows a surge in thematic and sectoral launches in recent years, raising concerns that many schemes held similar stocks despite being marketed as distinct offerings, creating concentrati...