Principal PNB Asset Management Company Pvt.Ltd. had proposed changes and re-categorization to SEBI for all the existing schemes of PNB Principal Mutual Fund.
This comes in wake of a recent circular by regulator SEBI (Securities and Exchange Board of India).
In order to simplify the investing process and decision making for common investors, SEBI proposed categorization and rationalization of all mutual fund schemes.
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.
PNB Principal Mutual Fund: Category changes
The table below contains the schemes of the Principal Mutual Funds whose categories have changed. Following are the new categories:
|1.||Principal Large Cap Fund||Focused Fund|
|2.||Principal Emerging Bluechip Fund||Large and Midcap Fund|
|3.||Principal SMART Equity Fund||Balanced Advantage Fund|
|4.||Principal Growth Fund||Multicap Fund|
|5.||Principal Dividend Yield Fund||Dividend Yield Fund|
|6.||Principal Index Fund – Nifty||Index Fund|
|7.||Principal Tax Savings Fund||Equity Linked Saving Scheme|
|8.||Principal Balanced Fund||Aggressive Hybrid Fund|
|9.||Principal Equity Savings Fund||Equity Savings Fund|
|10.||Principal Arbitrage Fund||Arbitrage Fund|
|11.||Principal Debt Savings Fund||Corporate Bond Fund|
|12.||Principal Dynamic Bond Fund||Dynamic Bond Fund|
|13.||Principal Short Term Income Fund||Short Duration Fund|
|14.||Principal Credit Opportunities Fund||Credit Risk Fund|
|15.||Principal Low Duration Fund||Low Duration Fund|
|16.||Principal Money Manager Fund||Ultra Short Term Fund|
|17.||Principal Cash Management Fund||Liquid Fund|
|18.||Principal Asset Allocation Fund-of-Funds||Retirement Fund|
|19.||Principal Global Opportunities Fund||Fund of Funds|
Principal PNB Asset Management Company Pvt. Ltd. has specified that these funds may also undergo name changes, as required by SEBI. Along with changes in the name, these funds may undergo a change in features as well.
If any such changes are required, they will take place before the 11th of June 2018.
All the unit holders of relevant schemes shall be notified about the change in name, category or any change in the fund whatsoever.
Impact on Investors
From an investor’s perspective, this new categorization will increase transparency. It shall help investors as there will be no longer confusing categories.
It will simplify decision making and selection of funds for all investors. It is a welcome move in the interest of all investor community.
Here are few things that might happen:
- Some schemes might get merged with others
- Your expense ratio might come down because of higher AUM per scheme
- The number of schemes might reduce
Mutual fund and Category Change
Mutual fund category defines where the mutual fund will invest its assets 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.
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 simplify decision making around selection and identification of mutual fund schemes.
So, as per new circular, a mutual fund company can have only one scheme under each category.
Thus, most mutual fund houses are renaming, re-categorizing, and merging mutual funds as per the directives were given by the Securities Exchange Board of India (SEBI.)
In abidance with the circular PNBs Principal Mutual Fund has re-categorized its mutual fund schemes.
To see the best mutual funds to invest from every category:
The 30 Best Mutual Funds to Invest in 2018 – Groww 30.
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.