Watch out for changes in style, mandate if a new fund manager takes over

Sebi's rule of one fund per category can trigger merger and reclassification of schemes after a takeover

Sundaram Asset Management Company (AMC) has acquired the asset management business of Principal AMC. The former will acquire the schemes managed by the latter. While Sundaram’s asset under management (AUM) is over Rs 40,000 crore, Principal AMC has a total AUM of Rs 7,447 crore.

According to market sources, Principal AMC’s AUM did not grow in the Indian market according to expectations. That may have triggered the parent’s decision to exit India.    

Rationalisation is inevitable

One development due to which a fund takeover nowadays triggers wholesale changes in funds is the Securities and Exchange Board of India’s (Sebi) categorisation