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.

IDFC Mutual Fund: Renaming and Categorization

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-

IDFC Arbitrage Plus Fund

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

IDFC Balanced Fund

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.

IDFC Super Saver Income Fund- Medium Term Plan

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

IDFC Dynamic Bond Fund

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

IDFC Arbitrage Fund

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

IDFC Credit Opportunities Fund

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

IDFC Nifty Fund

Old New
Name: IDFC Nifty Fund Name: No change
Category: An Open ended Equity scheme Category:  An open ended scheme tracking Nifty 50 Index

IDFC Super Saver Income Fund – Short Term Plan

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

IDFC Equity Fund

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

IDFC Money Manager Fund

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-

  1. Growth Option of MMF-IP has been proposed to be merged into the Growth Option of IDFC Super Saver Income Fund – Short Term Plan (SSIF-ST).
  2. Two new Options have been proposed to be introduced being, Quarterly Dividend and Annual Dividend Options. These new options shall be introduced under the Regular and Direct Plans of SSIF – ST from the Effective Date.

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.

  1. Post-merger, the Daily, Weekly and Monthly Dividend Options under MMF-IP (pay-out, reinvestment and sweep facility) are proposed to be merged into the Monthly Dividend Option under SSIF-ST (pay-out, reinvestment and sweep facility respectively).

IDFC Government Securities Fund

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

Impact on Investors

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:

  1. Some schemes might get merged with others
  2. Your expense ratio might come down because of higher AUM per scheme
  3. The number of schemes might reduce

Mutual fund and Category Change

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.

Know More: New Mutual Fund Rules by SEBI: Categorization and Rationalization Of Mutual Fund Schemes

Merger of mutual fund schemes

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.

Reasons for change

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.

To see the best mutual funds to invest from every category:
The 30 Best Mutual Funds to Invest in 2018 – Groww 30.

Happy investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.