Mergers and acquisitions have become common in mutual fund industry. Recently in the past, Kotak Mutual Fund acquired Pinebridge Mutual Fund, HDFC Mutual Fund acquired Morgan Stanley Mutual Fund, SBI Mutual Fund Bought Daiwa and Birla Sun Life acquired ING Mutual Fund.
Now, Pramerica Mutual Fund is going to buy Deutsche Mutual Fund. Deutsche will be the fifth foreign fund house to exit the mutual fund industry in the past two years.
Deutsche Mutual fund started its operations in India in 2002. The fund house has Rs 20,720 crore of assets under its management. Majority of its assets are under debt schemes while its equity schemes have assets worth Rs 638 crore.
Pramerica Mutual Fund started its business in 2010 and has assets worth Rs 2,124 crore under its management. It has three open-end equity funds with assets worth Rs 305 crore under its management.
Here’s what investors in Deutsche Mutual Fund can do
You don’t need to panic, your investments are safe. As per SEBI regulations, the exiting fund house has to give an exit option to investors for a period of 30 days. All those investors who are not comfortable with the acquisition can exit from the fund during this time. They will not have to pay any exit load during this period.
However, after the acquisition, Pramerica Mutual Fund may decide whether to merge the schemes of Deutsche Mutual Fund with its own fund or keep them as separate funds. If Pramerica decides to merge it with its own scheme, it will have to again provide an exit option to the investors.
Mergers and acquisitions shouldn’t trigger the panic button for the investors but they should become watchful of the performance of their funds. If there is significant downgrade in the performance of the fund after acquisition or merger, investor should consider making exit from the fund.
Read article: When Should You Exit from a Mutual Fund? to know when you should exit from a fund.