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:

S.No.Scheme NameCategory
1.Principal Large Cap FundFocused Fund
2.Principal Emerging Bluechip FundLarge and Midcap Fund
3.Principal SMART Equity FundBalanced Advantage Fund
4.Principal Growth FundMulticap Fund
5.Principal Dividend Yield FundDividend Yield Fund
6.Principal Index Fund – NiftyIndex Fund
7.Principal Tax Savings FundEquity Linked Saving Scheme
8.Principal Balanced FundAggressive Hybrid Fund
9.Principal Equity Savings FundEquity Savings Fund
10.Principal Arbitrage FundArbitrage Fund
11.Principal Debt Savings FundCorporate Bond Fund
12.Principal Dynamic Bond FundDynamic Bond Fund
13.Principal Short Term Income FundShort Duration Fund
14.Principal Credit Opportunities FundCredit Risk Fund
15.Principal Low Duration FundLow Duration Fund
16.Principal Money Manager FundUltra Short Term Fund
17.Principal Cash Management FundLiquid Fund
18.Principal Asset Allocation Fund-of-FundsRetirement Fund
19.Principal Global Opportunities FundFund 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:

  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 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

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.

Happy investing!

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