Disclaimer:This article does not wish to hurt the sentiments of any fruit group. I like them all!
You may have noticed that the names of some of your mutual fund schemes have changed.
Are you thinking, “I don’t care! Neither the old name nor the new name makes much sense to me anyway!”?
The name change might seem cosmetic but under the bonnet there has been a huge overhaul. SEBI – the regulator of the mutual fund industry in India, has brought about a change that has completely altered the way the mutual fund schemes will be designed and marketed from now. In the long run, it will hopefully lead to better information and transparency for all investors.
As Robin Sharma says, change is messy in the beginning and beautiful in the end.
So let’s deal with the messy part. Due to the new SEBI measure, the names of hundreds of schemes have changed, a lot of them have been merged with other schemes and some schemes have completely changed their characteristics.
Most financial news is like mumbo-jumbo that does not really affect you or your investments directly. But this one is different. The overhaul is very important. And it requires you to take action.
Let’s assume your mutual fund schemes are fruits. For better health, based on your body type, your doctor has asked you to have apples and avoid papaya for a few years. You have started regularly buying apples and eating them. Your health has also improved.
Now here is the problem. The change of names and other below-the-bonnet changes in the mutual fund schemes may have converted your apples into papaya. Or your apple might still be an apple. Either way, you need to find out.
If you find that your apples have turned into papayas, to preserve your health, you will need to sell the papayas and restock the apples. And if your apples are still apples, lucky you! There is nothing else to be done. That’s all. It is not very complicated.
What I am saying is that you need to review all your mutual fund schemes to ensure that the essential features of the scheme have not changed during this overhaul.You will need the help of your mutual fund distributor or your investment advisor to do this. Please contact them soon to do a full review and take action, if required.
PS: I have deliberately not gone into the details of the changes mandated by SEBI and how the mutual fund schemes and categories have changed. I am assuming you have better things to do with your time. For the few who are interested, your advisor should be able to help you with the information.