L&T Financial Services has proposed re-categorization of mutual funds to The Securities and Exchange Board of India (SEBI) for various schemes. The changes have come into place due to a recent circular by the regulator, SEBI, to rationalize the existing mutual fund schemes.
The reason for this rationalization is to simplify the investing and decision-making process for common investors.
SEBI proposed Categorization and Rationalization of All Mutual Fund Schemes, which all fund houses must adhere to.
Changes in the Scheme Names of L&T Mutual Fund
|Old Name||New Name||Old Category||New Category|
|L&T Arbitrage Opportunities Fund||L&T Arbitrage Opportunities Fund||Equity-Arbitrage||Hybrid-Arbitrage|
|L&T Banking & PSU Debt Fund||L&T Banking & PSU Debt Fund||Debt-Ultra Short Term||Debt-Banking & PSU|
|L&T Business Cycles Fund||L&T Business Cycles Fund||Equity-Diversified||Equity-Sectoral/Thematic|
|L&T Cash Fund||L&T Cash Fund||Liquid-Liquid||Debt-Overnight|
|L&T Dynamic Equity Fund||L&T Dynamic Equity Fund||Dynamic/Asset Allocation-Dynamic/Asset Allocation||Hybrid-Dynamic Asset Allocation|
|L&T Emerging Businesses Fund||L&T Emerging Businesses Fund||Equity-Diversified||Equity-Small Cap|
|L&T Equity Fund||L&T Equity Fund||Equity-Diversified||Equity-Multi Cap|
|L&T Equity Savings Fund||L&T Equity Savings Fund||Hybrid-Debt Oriented||Hybrid-Equity Savings|
|L&T Flexi Bond Fund||L&T Flexi Bond Fund||Debt-Income||Debt-Dynamic|
|L&T Floating Rate Fund||L&T Money Market Fund||Debt-Floating Rate Fund||Debt-Money Market|
|L&T Gilt Plan Investment||L&T Gilt Fund||Debt-Gilt||Debt-Gilt|
|L&T Income Opportunities Fund||L&T Credit Risk Fund||Liquid-Liquid||Debt-Overnight|
|L&T Income Opportunities Fund||L&T Credit Risk Fund||Debt-Income||Debt-Credit Risk|
|L&T India Large Cap Fund||L&T India Large Cap Fund||Equity-Diversified||Equity-Large Cap|
|L&T India Special Situations Fund||L&T Large and Midcap Fund||Equity-Diversified||Equity-Large & Mid Cap|
|L&T India Value Fund||L&T India Value Fund||Equity-Diversified||Equity-Value|
|L&T Infrastructure Fund||L&T Infrastructure Fund||Equity-Sector||Equity-Sectoral/Thematic|
|L&T Liquid Fund||L&T Liquid Fund||Liquid-Liquid||Debt-Liquid|
|L&T Midcap Fund||L&T Midcap Fund||Equity-Diversified||Equity-Mid Cap|
|L&T Monthly Income Plan||L&T Conservative Hybrid Fund||Debt-MIP||Hybrid-Conservative|
|L&T Resurgent India Corporate Bond Fund||L&T Resurgent India Bond Fund||Debt-Income||Debt-Medium Duration|
|L&T Short Term Income Fund||L&T Low Duration Fund||Debt-Short Term||Debt-Low Duration|
|L&T Short Term Opportunities Fund||L&T Short Term Bond Fund||Debt-Short Term||Debt-Short Duration|
|L&T Tax Advantage Fund||L&T Tax Advantage Fund||Equity-Tax Planning||Equity-ELSS|
|L&T Taxsaver Fund||Merged with L&T Tax Advantage Fund||Equity-Tax – ELSS||Equity-ELSS|
|L&T Triple Ace Bond Fund||L&T Triple Ace Bond Fund||Debt-Income||Debt-Corporate Bond|
|L&T Ultra Short Term Fund||L&T Ultra Short Term Fund||Debt-Ultra Short Term||Debt-Ultra Short Duration|
All unitholders of relevant schemes shall be notified about the change in name, category or any other changes in the fund, whatsoever.
What Will Be the Impact on Investors?
From the perspective of a common retail investor, the new categorization and rationalization process will increase transparency in the investing process. It will empower investors by eliminating confusion in the identification of the mutual fund categories as well.
Moreover, it is expected that the new measure will simplify decision making and selection of funds for all investors.
Here Are Few Characteristics that Might Develop After Recategorization:
- Schemes might merge or combine with each other
- Your expense ratio might come down because of higher AUM per scheme
- The number of schemes will reduce
What is category change?
Mutual fund category explains where and in what proportion the fund will invest in assets under management (AUM) and in what proportion. Therefore, in the process of rationalization, if there is a change in category of mutual funds, an investor must keep track of the change.
This will enable him/ her to change the strategy of investment in these mutual funds, if required. It is recommended to contact the advisor if one faces any issue or doubt over any of the re-assessed categories of funds.
What Is the Reason for Re-Categorization?
Securities Exchange Board of India (SEBI) recently came up with a circular instructing re-categorization and rationalization of all mutual funds schemes. Basically, SEBI wants to reduce confusion for investors and simplify the decision-making process, around selection and identification of mutual funds.
As per the 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 of SEBI. In abidance with the circular, L&T Mutual Fund has also re-categorized its mutual fund schemes.
Disclaimer: The views expressed here are that of the author and do not reflect those of Groww.