Aditya Birla Sunlife Mutual Fund to merge schemes investing overseas

In a notice sent to the unitholders of these schemes the fund house said that the merger will be effective from the close of business hours on July 28, 2023.

Aditya Birla Sunlife Mutual Fund has announced that it will merge Aditya Birla Sun Life International Equity Fund – Plan B (ABSB) and Aditya Birla Sun Life Commodity Equities Fund – Global Agri Plan (ABSC) into Aditya Birla Sun Life International Equity Fund – Plan A (ABSA).

In a notice sent to the unitholders of these schemes the fund house said that the merger will be effective from the close of business hours on July 28, 2023.

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ABSB is an equity scheme that manages assets worth Rs 91 crore in stocks listed on Indian as well as overseas bourses and has given 18.44 percent returns in three years. ABSA has invested Rs 105 crore in stocks listed overseas and has given 9.33 percent returns over the same period. ABSC has assets worth Rs 13 crore invested in shares of companies that are a part of the agriculture sector and listed across the globe and has given 17.61 percent returns over three years.

Over the three years ended June 27, 2023, international equity funds, on an average, have given 8.71 percent returns, as per Value Research.

After the merger is done, the surviving scheme, ABSA, will be renamed as Aditya Birla Sun Life International Equity Fund. Since the merger of the schemes is a change of fundamental attributes, it is mandatory to give an exit window to existing investors without any exit load. The fund house, in compliance with the rule, has set this exit-load free window from June 29, 2023 till July 28, 2023, both days included. Though an exit option has been provided to investors, it is not mandatory to opt for it. Existing investors who agree to the merger may remain invested in their respective schemes.

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“Considering the subdued growth and lack of scalability in the merging schemes, we decided to merge them into Aditya Birla Sun Life International Equity Fund – Plan A, which has a diversified portfolio across sectors and geographies,” said A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.

“Investments in global markets provide diversification benefits, mitigate country-specific and concentration risks, and enable participation in niche global themes as well,” says Balasubramanian.

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After the merger of the schemes, units of the surviving scheme will be allotted to investors holding units of the merging schemes. This does not amount to a transfer and hence does not attract any capital gains tax. However, if the unitholders choose to sell their units, then they may have to pay capital gains, as per the income tax rules.

The merger of mutual fund schemes is not rare. Many times, fund houses do so to consolidate their product offerings. It is also done when one fund house takes over the business of another. Recently, LIC Mutual Fund announced it was taking over schemes of IDBI Mutual Fund. Some IDBI Mutual Fund schemes will soon merge into LIC Mutual Fund schemes.