What Would You Do If The Name Of Your Mutual Fund Was Changed?: [Essay Example], 828 words GradesFixer
exit-popup-close

Haven't found the right essay?

Get an expert to write your essay!

exit-popup-print

Professional writers and researchers

exit-popup-quotes

Sources and citation are provided

exit-popup-clock

3 hour delivery

exit-popup-persone
close
This essay has been submitted by a student. This is not an example of the work written by professional essay writers.

What Would You Do if the Name of Your Mutual Fund Was Changed?

Download Print

Pssst… we can write an original essay just for you.

Any subject. Any type of essay.

We’ll even meet a 3-hour deadline.

Get your price

121 writers online

blank-ico
Download PDF

Fund names change for a variety of reasons. Mutual funds could change their name under some very specific circumstances like when the ownership pattern changes. This typically happens when an original partner’s stake is bought out by the domestic promoters. We saw DSP Blackrock change its name back to DSP Mutual Fund after it bought out the stake of Blackrock. Then we have situations where the fund name changes because the particular business group chooses to sell out.

For example, Kothari Pioneer was bought out by Templeton, Fidelity by L&T Mutual Fund, Alliance Mutual Fund by Birla AMC and the list can go on. This will obviously lead to a name change, although the essential structure of the fund might remain the same. Thirdly, there could be a change in the name due to a change in the essential focus of the fund. For example, a diversified fund may reposition itself as an index fund or a diversified fund may choose to become a sector fund. In this case, you have to be very clear that you are comfortable with the fundamental shifts in the nature and objective of the fund. Finally, there is a change in fund name that is a pure statutory requirement as per the new norms for mutual fund classification. How should you approach each of these cases?

Your strategy when the internal ownership structure changes

Many foreign funds came into India with expectations of rapid growth in mutual funds. They typically found the going tough without any appropriate retail reach or the advantages of a bancassurance model. Not finding the going too lucrative, many large global players like Merrill Lynch, Morgan Stanley, Goldman Sachs, Fidelity, Deutsche and even JPM have opted out of the Indian mutual funds market. This is not a substantial difference to the structure of the scheme. Unless you are really uncomfortable with the domestic group, you can continue.

Your strategy when the existing fund sells out to a new owner

In the last 25 years many funds have sold out and exited the AMC business altogether. These include names like Goldman Sachs, Morgan Stanley, JP Morgan, Deutsche etc. Much earlier, we saw the likes of Alliance, Zurich and Fidelity sell out of the funds business altogether. This is again not a major cause worry if the buyout is done by an Indian group that can provide stability and a concerted strategy. You do not have to be in a hurry to sell out in such circumstances.

Your strategy if the fund changes its core objectives

This is a slightly more serious case and requires immediate attention from your side. For example, if a diversified equity fund repositions itself as a multi-cap fund then it means the inclusion of more mid caps which you may not be comfortable with. There are cases where diversified funds convert to index funds or index funds convert to diversified funds. If you are not comfortable with the return and risk profile shift, you can always opt to switch out of the fund. In such cases, you need to sit with your financial planner and work out the implications. For example, if you are holding on to an equity diversified fund for your retirement, then it will be sub-optimal if it converts into an index fund. The risk may be lower, but the returns will also be proportionately lower in this case. That could have a compounding effect on your long term goals. It is always better to consult with your advisor if it impacts your long term financial plan.

Your fund has been reclassified based on regulatory lines

One of the essential things that the recent SEBI reclassification norms did was to make the names of the funds more in line with the actual intent and content of the fund. As a result, many funds had to restructure and rename their schemes accordingly. Let us look at two instances of balanced funds, to understand this point better. First, there is ICICI Prudential Balanced Fund, which changed its name to ICICI Prudential Equity & Debt Fund. However, the objective remained the same. From an investor’s perspective, this is not something that really requires specific attention. Secondly, HDFC Prudence Fund changed its name to HDFC Balanced Advantage Fund. But the real issue was that the essential strategy changed. From being a traditional balanced fund with 40-75% in equities, the focus shifted to becoming a dynamic allocation fund where both equity and debt could range from 0% to 100%.

As an investor you are now shifting from a more passive allocation to active allocation. You need to sit with your advisor and work out if this is in sync with your long term goals. Remember, that when schemes get merged or bought out, there are no tax implications. However, when you exit due to a shift in strategy, then it is considered to be a sale and has STT and tax implications. You need to make your call accordingly.

Remember: This is just a sample from a fellow student.

Your time is important. Let us write you an essay from scratch

100% plagiarism free

Sources and citations are provided

Find Free Essays

We provide you with original essay samples, perfect formatting and styling

Cite this Essay

To export a reference to this article please select a referencing style below:

What Would You Do If The Name Of Your Mutual Fund Was Changed? (2020, March 16). GradesFixer. Retrieved November 29, 2020, from https://gradesfixer.com/free-essay-examples/what-would-you-do-if-the-name-of-your-mutual-fund-was-changed/
“What Would You Do If The Name Of Your Mutual Fund Was Changed?” GradesFixer, 16 Mar. 2020, gradesfixer.com/free-essay-examples/what-would-you-do-if-the-name-of-your-mutual-fund-was-changed/
What Would You Do If The Name Of Your Mutual Fund Was Changed? [online]. Available at: <https://gradesfixer.com/free-essay-examples/what-would-you-do-if-the-name-of-your-mutual-fund-was-changed/> [Accessed 29 Nov. 2020].
What Would You Do If The Name Of Your Mutual Fund Was Changed? [Internet] GradesFixer. 2020 Mar 16 [cited 2020 Nov 29]. Available from: https://gradesfixer.com/free-essay-examples/what-would-you-do-if-the-name-of-your-mutual-fund-was-changed/
copy to clipboard
close

Sorry, copying is not allowed on our website. If you’d like this or any other sample, we’ll happily email it to you.

    By clicking “Send”, you agree to our Terms of service and Privacy statement. We will occasionally send you account related emails.

    close

    Attention! this essay is not unique. You can get 100% plagiarism FREE essay in 30sec

    Recieve 100% plagiarism-Free paper just for 4.99$ on email
    get unique paper
    *Public papers are open and may contain not unique content
    download public sample
    close

    Sorry, we cannot unicalize this essay. You can order Unique paper and our professionals Rewrite it for you

    close

    Thanks!

    Your essay sample has been sent.

    Want us to write one just for you? We can custom edit this essay into an original, 100% plagiarism free essay.

    thanks-icon Order now
    boy

    Hi there!

    Are you interested in getting a customized paper?

    Check it out!
    Having trouble finding the perfect essay? We’ve got you covered. Hire a writer

    GradesFixer.com uses cookies. By continuing we’ll assume you board with our cookie policy.