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Kotak Mutual Fund (MF) in a board meeting held in January 2022 decided to modify the scheme documents for its Multi Asset Allocator Fund of Fund – Dynamic to bring in a change in the list of assets that the scheme can invest in. The changes come into effect from June 3, 2022. 

One, InvITs and REITs will no longer be part of the list of permissible assets that the scheme can invest in. Earlier, the scheme could invest 0-5% in them. Apart from this, as per the modified scheme documents, the scheme will also not invest in instruments such as securitised debt, derivatives and credit default swaps. According to Abhishek Bisen, Fund Manager – Debt, Kotak MF, the scheme, in its current form too, has not been investing in all these assets. The proposed changes only put this formally on paper. The scheme will focus only on investing in three assets - equity, debt and gold - to keep its composition simple. 

Two, under the existing scheme documents, domestic equity (Kotak MFs schemes including index funds and ETFs) and overseas funds / ETFs are listed out separately under the scheme’s asset allocation. According to Bisen, the two have now been clubbed together since both are equity and the view on them is directionally the same, so there is no need to list them out separately. 

These changes will be treated as ‘change in the fundamental attribute of the scheme’ and investors will be allowed an option to exit without an exit load. However, this does not amount to any change in the scheme’s character and risk profile, according to Bisen. The scheme continues to be labeled as ‘high’ risk under SEBI’s Riskometer.

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