Abiding by the recent circular by regulator SEBI (Securities and Exchange Board if India), mutual fund of many Asset Management Companies (AMCs) are being changed, including those of IDFC Mutual Fund.
In order to simply the investing process and decision making for common investors, SEBI proposed categorization and rationalisation of all mutual fund schemes.
The SEBI requires all mutual fund houses to change the names of their schemes and categorize them according to certain guidelines mentioned in the circular dated October 6 2017 and December 4 2017.
According to the guidelines and requirements of SEBI, some of the schemes under IDFC Mutual Fund have undergone name change, while some have undergone a change in their respective category.
Moreover, there are some funds which have not undergone any change, neither in their names or their categories. Here are the following funds with their respective changes-
Old | New |
Name: IDFC Arbitrage Plus Fund | Name: IDFC Equity Savings Fund |
Category: Open ended equity scheme | Category: Open ended equity scheme investing in equity, arbitrage and debt |
Investment Objective: To generate income (absolute to low volatility returns) by taking advantage of opportunities in the cash and the derivative segments of the equity markets including the arbitrage opportunities available within the derivative segment, by using other derivative based strategies and by investing the balance in debt and money market instruments. | Investment Objective: To generate income by predominantly investing in arbitrage opportunities in the cash and derivatives segments of the equity markets along with debt and money market instruments and to generate long-term capital appreciation by investing a portion of the Scheme’s assets in equity and equity related instruments. |
Benchmark: Crisil Liquid Fund Index | Benchmark: 30% Nifty 50 + 70% Crisil Liquid Fund Index |
Old | New |
Name: IDFC Balanced Fund | Name: IDFC Hybrid Equity Fund |
Category: An Open ended Balanced scheme | Category: An open ended hybrid scheme investing predominantly in equity and equity related instruments |
Investment Objective: The Fund seeks to generate long term capital appreciation along with current income by investing in a mix of equity and equity related securities, debt securities and money market instruments. | Investment Objective: The Fund seeks to generate long term capital appreciation by investing predominantly in equity and equity related instruments. The Fund also seeks to generate current income by investing in debt securities and money market instruments. |
Old | New |
Name: IDFC Super Saver Income Fund – Medium Term Plan | Name: IDFC Bond Fund – Medium Term Plan |
Category: An Open ended debt scheme | Category: An open ended medium term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 years and 4 years |
Investment Objective: The primary objective of the Scheme is to generate stable returns with low risk strategy by investing in good quality fixed income securities and money market securities | Investment Objective: The scheme seeks to invest in a diversified set of debt and money market securities with the aim of generating optimal returns over medium term such that the Macaulay duration of the portfolio is between 3 years and 4 years |
Old | New |
Name: IDFC Dynamic Bond Fund | Name: No change |
Category: An Open ended income scheme | Category: An open ended dynamic debt scheme investing across duration |
Investment Objective: To generate optimal returns with high liquidity by active management of the portfolio, by investing in high quality money market & debt instruments | Investment Objective: To generate optimal returns by active management of the portfolio by investing in debt and money market instruments across maturities |
Old | New |
Name: IDFC Arbitrage Fund | Name: No change |
Category: An Open ended equity scheme | Category: An open ended scheme investing in arbitrage opportunities |
Benchmark: Crisil Liquid Fund Index | Benchmark: Nifty 50 Arbitrage Index |
Old | New |
Name: IDFC Credit Opportunities Fund | Name: IDFC Credit Risk Fund |
Category: Open Ended Income Scheme | Category: An open ended debt scheme predominantly investing in AA and below rated corporate bonds |
Investment Objective: The Fund seeks to generate returns by predominantly investing in a portfolio of corporate debt securities across the credit spectrum within the investment grade | Investment Objective: The Fund seeks to generate returns by investing predominantly in AA and below rated corporate debt securities across maturities |
Old | New |
Name: IDFC Nifty Fund | Name: No change |
Category: An Open ended Equity scheme | Category: An open ended scheme tracking Nifty 50 Index |
There has been a merger of IDFC Money Manager Fund and Investment Plan into IDFC Super Saver Income Fund- Short Term Plan.
Old | New |
Name: IDFC Super Saver Income Fund- Short Term Plan | Name: IDFC Bond Fund – Short Term Plan |
Category: An Open ended debt scheme | Category: An open ended short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 1 year and 3 years |
Investment Objective: The primary objective of the Scheme is to generate stable returns with low risk strategy by investing in good quality fixed income securities and money market securities | Investment Objective: The scheme seeks to invest in a diversified set of debt and money market securities with the aim of generating optimal returns over short term such that the Macaulay duration of the portfolio is between 1 year and 3 years |
Old | New |
Name: IDFC Equity Fund | Name: IDFC Large Cap Fund |
Category: An Open ended Equity scheme | Category: Large Cap Fund – An open ended equity scheme predominantly investing in large cap stocks |
Investment Objective: The investment objective of the Scheme is to seek to generate capital growth from a portfolio of predominantly equity and equity-related instruments (including equity derivatives). The scheme may also invest in debt and money market instruments to generate reasonable income | Investment Objective: The investment objective of the Scheme is to seek to generate capital growth from predominantly investing in large cap stocks |
As given above that IDFC Money Manager Fund – Investment Plan (MMF-IP) shall be merged in to IDFC Super Saver Income Fund – Short Term Plan (SSIF-ST). The merger will come in to effect from Monday, May 14, 2018, which will be known as the Effective Date of the merger.
Details of the merger-
Moreover, the Quarterly and Annual Dividend Options under the MMF-IP (pay-out, reinvestment and sweep facility) are proposed to be merged into the Quarterly and Annual Dividend Options under SSIF-ST (pay out, reinvestment and sweep facility) respectively.
IDFC Government Securities Fund – Investment Plan (G-Sec-IP) and Provident Fund Plan (G-Sec-PF) shall be merged with effect from Monday, May 07, 2018. The Provident Fund Plan shall be merged in to the Investment Plan.
Old | New |
Category: An Open ended gilt scheme | Category: An open ended debt scheme investing in government securities across maturities |
Investment Objective: To generate optimal returns with high liquidity by investing in Government Securities | Investment Objective: –The scheme seeks to generate optimal returns with high liquidity by investing in Government Securities across maturities |
From investor perspective, this new categorization will help investors as there will be no longer confusing categories. Here are few things that might happen are:
Mutual fund category defines where the mutual fund will invest its Assets under Management and in what proportion.
If there is a change in category of the mutual fund, an investor should keep track of the change. This will enable him/ her to also change the strategy of investment in these mutual funds, if required.
It is advisable to contact the advisor if one faces any issue, doubt over whether the investment needs to be re-assessed due to any change in the name or category of the fund.
If mutual funds are being merged, investors should not be concerned. Mutual Fund house shall take care of the merger and its requirements and formalities.
Also as there is no real change in the category of the mutual funds that an investor has invested in, they do not require to make any changes to their investment strategy and should just be updated about the merger.
SEBI recently came up with a circular requiring categorization and rationalization of all mutual funds schemes. Basically, SEBI wants to reduce confusion for investors and simply decision making around selection and identification of mutual fund schemes.
So, as per new circular one mutual fund company can have only one scheme under each category.
Thus, all Mutual Fund Houses are renaming, re-categorizing, and merging mutual funds as per the directives were given by the Securities Exchange Board of India.
Happy investing!
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.