Some of India’s two crore mutual fund investors could be in for a surprise as the changes are radically different from what they signed up for initially. The country’s 40-odd fund houses are making ‘fundamental changes in attributes’ in their schemes to comply with SEBI October 2017 directives on scheme classifications.
Funds have been putting up these notices on their website since the start of April 2018 and giving investors about a month to make up their minds. Investors can either exit the fund, without paying an exit load before the deadline or stay on in the new fund.
However, if they choose to exit they will still be liable to pay tax on any gains in their holdings. This puts investors between a rock and a hard place – either accept being part of completely different schemes than the ones they signed up for, or pay potentially hefty amounts in tax. As we sift through long mutual fund notices, littered with fine print, we are putting together a list of the schemes going through the most radical changes. If you are an investor in one of them, pay attention.
Note that a lot more schemes are changing than the ones we’ve covered below and you may not agree with those changes – making an exit necessary.
- SBI Mutual Fund
SBI Magnum Gilt Fund – Short Term Plan, SBI Treasury Fund and SBI Magnum Monthly Income Plan – Floater. You can read about what’s happening with these funds here.
The deadline for exit-load free redemption from SBI MF schemes is 15th May 2018
- ICICI Prudential Mutual Fund
ICICI Prudential Dynamic Plan, ICICI Prudential Indo Asia Fund, ICICI Prudential Select Large Cap Fund, ICICI Prudential Short Term Plan. You access our analysis of the change in these funds, here.
The deadline for exit-load free redemption from ICICI MF schemes is 25th May 2018.
- Reliance Mutual Fund
Reliance Regular Savings Fund – Equity, Reliance Top 200 Fund, Reliance Media and Entertainment Fund and Reliance NRI Equity Fund. You can read our analysis along with the AMC’s responses here.
The deadline for exit-load free redemption from Reliance MF schemes is 28th April 2018.
- Franklin Templeton Mutual Fund
You can read about changes to the equity schemes of Franklin Templeton, here.
- Axis Mutual Fund
Axis Triple Advantage Fund and Axis Constant Maturity Fund have been changed dramatically. You can view our article on the changes here.
- Kotak Mutual Fund
Kotak AMC has reclassified Kotak Midcap Scheme as Kotak Small Cap Fund. The benchmark of the scheme has been changed from Nifty Midcap 100 to Nifty Small Cap 50. Read here.
‘Kotak Select Focus Fund’ to become ‘Kotak Standard Multicap Fund.’ Read here more about the change.
- HDFC Mutual Fund
HDFC Balanced and Premier Multi-cap funds will be merged to form a new scheme while HDFC Prudence and HDFC Growth Fund will be merged to form another new scheme. Read here.
- L&T Mutual Fund
L&T Emerging Business Fund will be required to raise its minimum small cap allocation from 50% to 65% to comply with SEBI rules. Read here.