Certain schemes of Sundaram MF were merged with corresponding schemes of Principal MF and vice-versa
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Sundaram Mutual Fund (MF) completed the acquisition of Principal Mutual Fund on 31 December 2021. After the acquisition, certain schemes of Sundaram MF were merged with corresponding schemes of Principal MF and vice-versa.
Unit Holders of the transferor schemes (read as old schemes) who did not agree to the proposed merger, were given an option to exit without any exit load, for a period of 30 days till 24 December 2021.
Unitholders who have not exercised their option will be considered to have agreed to the merger between the two firms. In addition to the merger of schemes, three schemes of Principal MF were taken over and renamed as Sundaram funds (see table).
Post this acquisition, Sundaram has offered schemes in around 28 open-ended categories; 12 in equity, 5 in hybrid, 9 in debt, 1 index fund and 1 overseas fund-of-fund. Sundaram MF has also announced Ravi Gopalakrishnan as the chief investment officer–equity. Ravi was formerly head–equities at Principal MF.
After the acquisition, the old schemes ceased to exist and unit holders in these schemes would have been allotted different units in the newly merged schemes. For allotment of units, the market value of units in the old scheme as on the merger date was considered to determine the number of units to be allotted in the new scheme.
For example, if you were holding 10,000 units of a Principal MF scheme as on the date of merger with NAV value of ₹22.50 per unit, then the market value of your investment would be ₹2,25,000. If the NAV of the new scheme on the merger date is ₹15 per unit, you would be allotted 15,000 units (2,25,000/15).
You would have received account statements from Sundaram Mutual with all the relevant details.
Further, all systematic registrations (SIPs) which were active in old schemes will be continued as before. Note that if you have opted for redemption but not agreed to the merger during the exit window, your systematic transaction registration will not be cancelled automatically and you will need to submit a separate request for cancellation to the bank.
Also, if investors have submitted Form 15G/H only for Principal MF for FY 2021-22, then such investors should submit the same again to Sundaram MF.
What do experts say?
Experts believe that the acquisition by Sundaram MF is a positive sign for the group as well as investors. Sriram BKR, senior investment strategist at Geojit Financial Services, says that, “We feel the merger appears to have taken into consideration the importance of continuity aspect, considering the track record and the need. That’s important. It means the schemes would likely to continue with its existing strengths."
In terms of specific schemes, Nirav Karkera, head of research, Fisdom said “Among surviving schemes of Principal Mutual Fund, taken over and renamed by Sundaram Mutual Fund, we are confident that Sundaram Focused Fund will continue to remain a strong proposition within the category. Among schemes that have been merged, we are reasonably confident with our positive outlook on Sundaram Global Brand Fund and Sundaram Balanced Advantage Fund."
Commenting on what investors should do now, Sriram said unitholders can monitor the performance of the schemes for some time and then take review decisions, as one would do in the case of an equity portfolio.
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