Skip to main content

Mutual Fund scheme changes

Best SIP Funds to Invest Online 



Go through the new fund positioning and understand it. If the basic investment strategy is significantly different and you do not relate to the new positioning you may like to exit.

In the last few weeks, as a mutual fund investor you must have been getting notices from asset management companies (AMCs) on whether you want to exit from the fund where there is a 'change of fundamental attribute'. It may seem like your entire portfolio of mutual funds is changing. Now, all AMCs have been undertaking this process of changing fund descriptions, consequent to Securities and Exchange Board of India's (SEBI) fund categorisation rules. In such a scenario, how do you make out what your fund is up to?

New fund positioning

A little research will reveal what the fund, subsequent to the change, is up to. AMCs have communicated the investment objectives, the asset allocation pattern as per the Scheme Information Document (SID) as well as the brief investment strategy / fund positioning. It is available on the website of the AMCs, and also in the notices that are hitting you. Go through the new fund positioning, understand it, and better still, if you have a financial adviser, consult with him.

An easy way to put things in place is to read Sebi-defined fund categories first. Once you understand what each category stands for and what Sebi expects AMCs to do, your life becomes easy. Now that there is uniformity among AMCs on how they can manage funds in each category, you know the baskets in which the 'blocks' (the funds you have invested in) would be placed. Sebi-defined fund categories are available on the Sebi website, in the circular dated October 6, 2017. Various AMCs have prepared a presentation / leaflet on which fund of theirs correspond to which category, and that would be available on their respective websites.

Once you have put things into place, you have to decipher to what extent your fund has changed. If it is only a peripheral change with the basic investment strategy remaining same or broadly similar, you have got the answer for yourself. In the few cases the change is significant, you have to see which category the fund is going into. It could be a change in the fund itself, or the fund may be merged with another one. You move your block (i.e. fund) from the existing basket (i.e. category) to a new basket. Once you have understood the 'basket', you have to examine whether it suits your scheme of things.

Your final decision

What ultimately matters is your asset allocation and not minor changes in fund description. Your portfolio comprises equity, debt and perhaps a bit of alternates like gold. Even if one of your 'blocks' shift to a different category, it is your overall asset allocation that you have to take care of. If that is broadly in place, then don't rush into anything. Let all the AMCs finish the re-categorisation, and then you can do a proper review of your portfolio.

The benefit of waiting a couple of months will be that once all the AMCs complete the exercise, you will get a full picture of your mutual fund portfolio. The only small downside of waiting is that in the one-month exit window which you get, in case of a 'change of fundamental attribute' of a fund, there is no exit load. The context of exit load is relevant only for funds that have an exit load. Tax implication, if you exit, will be there anyway.


In an extreme case you may like to exit a fund, if it has gone through a 'change of fundamental attribute' and you do not relate to the new positioning. However, there is no 'last date' for exiting; you can do it any day, barring any incidence of exit load in a few funds. You may take your time to analyse what is happening to the funds, and then take a considered decision.



SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Popular posts from this blog

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...
Read more

ICICI Prudential Balanced Fund

 ICICI Prudential Balanced Fund scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. An impressive show in the last couple of years has propelled this fund from a three-star to a four-star rating. The fund has traditionally featured a high equity allocation, hovering at well over 70 per cent, which is higher than the allocations of the peers. But in the last one year, the allocation has been moderated from 78-79 per cent levels to 66-67 per cent of the portfolio. ICICI Prudential Balanced Fund appears to practise some degree of tactical allocation based on market valuations. Within equities, well over two-thirds of the allocation is parked i...
Read more

Equity investors should track market developments

The stock markets have been volatile over the last few days. They are in a sideways movement and trying to find the bottom after a fall of 20 percent a week ago. The market sentiments are not very positive at the moment and the recent developments are expected to dampen them further. Globally, governments and central banks are trying to cut rates and announce packages to improve business sentiments. These are some of the major developments in the markets last few month: A) Global On the global front, another large US bank went into a financial crisis. The US government took quick measures to avoid the spread negative sentiments in the markets. The US government announced a bail-out package and agreed to shoulder the losses on the bank's risky assets. China announced a large cut in interest rates and reserve ratio to boost the investor sentiments in the markets. Recently, the World Bank announced China's growth rate next year will come down to 7.5 percent. The European ...
Read more

More on Mutual Funds

What Is a Mutual Fund ? A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. Anybody with an investable surplus of as little as a few thousand rupees can invest in Mutual Funds. These investors buy units of a particular Mutual Fund scheme that has a defined investment objective and strategy The money thus collected is then invested by the fund manager in different types of securities. These could range from shares to debentures to money market instruments, depending upon the scheme's stated objectives. The income earned through these investments and the capital appreciation realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.   What Are The Types of Mutual Fund Scheme...
Read more

PF e-Passbook

  Provident Fund e-Passbook   The Employees Provident Fund Organisation now runs an e-passbook service that enables members to log in and access their provident fund accounts . This facility enables tracking of the money and ensuring that the employer's contribution has been deposited into the account. This facility is available to those whose accounts are with the central provident fund commissioner for maintenance and can be availed at members.epfoservices.in . Registration A member can register at the portal easily by using PAN , Aadhar or passport number as the log in and the mobile numbers as the PIN . This combination enables easy retrieval of information. Accounts After logging in, the member has to choose the state where the employer is located, and enter the code number of the employer, account number and name. These details can be obtained from any existing PF document . PIN To download the passbook, the member will request...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now