Re-categorisation of mutual fund schemes

SEBI’s re-categorisation of mutual fund schemes may lead to a lot of unnecessary churning of portfolios by investors, as feared by MF experts.

“Investors will go for re-shuffling their portfolios a lot as more fund houses announce re-categorisation of their existing schemes,” says Sridevi Ganesh, CFP, Chamomile Investment.

As of now, only DSP BlackRock and Motilal Oswal Mutual Fund announced changes in 11 and 4 schemes’ features, respectively. The changes would be effective from March 16, 2018. Sridevi Ganesh says that “just because the scheme is changing to adjust to the SEBI’s amendment, it need not be taken out of an investor’s portfolio. Investors must remain calm and take a look at their goals. If the amended schemes fit into their desired asset allocation, they need not make unnecessary changes.”

Surya Bhatia, a certified financial planner said, “Investors should review their portfolio to make alterations to match their risk profile and goals.”

“Mutual fund industry is going through a lot many changes and investors actually need much professional advice to keep their investments in line with their goals,” says Sridevi Ganesh.