 "Tipping Point: Why are scheme mergers gathering pace?")
Why are scheme mergers gathering pace?
Several schemes of mutual funds have been merged in recent times. DSP BlackRock Technology.com Fund, for example, was merged with DSP BlackRock Opportunities Fund. One reason for scheme mergers is a regulatory nudge from the Securities and Exchange Board of India which wants to fund houses to merge schemes with similar mandates. Also, often, when a theme is doing well, fund houses might launch a fund based on it. Subsequently, the sector or theme or that particular fund might not do well and fail to gather much assets under management (AUM). It then becomes
unviable for the fund house to run the scheme.
What are the lessons for investors?
At the time of choosing a fund, avoid those whose AUM size is below a certain threshold. Also, if the fund into which your existing fund has been merged does not meet your portfolio requirements, exit.
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