If you are receiving mails and phone updates indicating change in the name of funds you have invested or some modification to its investment mandate, you need to look into it with seriousness. Market regulator, SEBI came up with a regulation on categorization and rationalization of mutual fund schemes to bring about uniformity in the offerings from various asset management companies (AMCs).
Effectively, in all, SEBI has specified 36 categories of mutual fund schemes. Moreover, all AMCs will have to standardise their products to fall under any of these categories. So far, AMCs have mutual fund schemes which have overlapping themes and investment mandates, which have caused confusion among investors when it comes to comparing funds before deciding on which one to use. With this rule coming in, AMCs are not allowed to offer two schemes under different names with identical investment mandates.
Effectively; one category of mutual fund will be permitted to sell only one mutual fund scheme. As a result of this mandate, the fund houses are now realigning their schemes and portfolio to classify them under the newly formed categories. This is a big advantage to investors, who will now exactly know where their funds invest and will ease comparison among funds and have less confusion in fund selection.
The move has resulted in fund mergers; change in investment mandates as well change in names to go with the new rules. Investors need to relook at the funds in which they had invested to check if these investments are in-line with what they had invested for. In instances where the fund’s investment mandate has changed, it would be prudent to check if the new mandate meets with your investment expectation or change in risk profile to continue investing.
These changes also mean that if the fund that you have invested in has had any changes, you may not have a historical return applicable to it in the new circumstances. Do not lose heart, because this would be the case for many other investors too. However, to ensure that you are investing to meet your desired investment outcome, check if your existing mutual fund investments continue to retain the role for which you had invested in the first place. If that is not the case, it is time for you to start evaluating and making changes to your mutual fund investments.