Going forward, mergers will become difficult for the funds. Also performance will be more easy to understand. Equity Sectoral funds (specific to a sector) are not expected to be much affected by mergers as was earlier. All this is good for the investor.
Chart in this blog post is taken from:
This article has a good chart too. Go to the link after this section.
If your scheme undergoes a big change, evaluate. For instance, SBI Treasury Advantage Fund, which will be known as SBI Banking and PSU Fund, was meant for short-term investments. Now, its strategy would be to invest in debt scrips of state-owned companies and banks. "If the risk profile of a scheme changes, look at it again. If it no longer meets your purpose, leave it," said Vidya Bala, head-mutual fund research, Fundsindia.com.
Don't blindly go by the change in your fund category. Mirae Asset Emerging Bluechip Fund (MEBF)—an erstwhile mid-cap fund—has become a large- and mid-cap fund. The name remains the same, and, what's more, the fund remains the same too.
On the face of it, a shift from a mid-cap to a large- and mid-cap fund is a big change. But dig a little deeper and you might not want to worry about it. According to capital markets regulator Securities and Exchange Board of India (Sebi), a large- and mid-cap fund must invest a minimum of 35% each in large- and mid-cap stocks. As it turns out, MEBF has been increasing its exposure to large-cap companies over time; from an average of 20% in 2014 and 26% in 2015 to 38% so far this year, as per Value Research.
In order to standardise performance disclosure of schemes once they have been merged, markets regulator Sebi has asked mutual fund houses to disclose the weighted average performance of the new as well as the old product.
More than 20 prominent mutual fund schemes got merged before May 2018. Many mutual fund houses have merged their schemes to comply with Sebi's new re-categorisation norms for mutual funds. Many of these schemes are either merged into some existing scheme or merged with another existing scheme to form a new scheme.
Read more at:
List of merged funds: