Publish Date:
Aditya Birla Sun Life Mutual Fund in a notice to its investors stated that it has approved the proposal for merger of two International funds.
A mutual fund merger is the process of combining two or more mutual funds into a single fund. ABSL 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 the Aditya Birla Sun Life International Equity Fund – Plan A (ABSA).
Aditya Birla Sun Life International Equity Fund – Plan B is an equity scheme that manages assets worth Rs 91 crore in stocks listed on Indian as well as overseas markets and has given 18.44% CAGR returns in three years. Whereas, Aditya Birla Sun Life Commodity Equities Fund – Global Agri Plan 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% CAGR returns over three years.
Mr A Balasubramanian, MD & CEO, ABSL AMC, said, “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.”
Now, the surviving scheme ABSA into which the two schemes will be merged has invested Rs 105 crore in stocks listed overseas and has given 9.33% returns over the same period. The Plan A aims to make a geographically diverse portfolio, take advantage of the low correlation between countries and is high-quality and high-growth.
Once the merger is done, the surviving scheme, that is ABSA, will be renamed as Aditya Birla Sun Life International Equity Fund. The merger shall be effective after the close of business hours on Friday, July 28, 2023 (Effective Date) or the immediately following business day, if such day is a Non-Business Day.
Given that the merger of schemes is a change of fundamental attributes, the existing unitholders of the merging schemes and surviving scheme are given an option to exit, that is, either redeem their investments or switch their investments to any other schemes of ABSL Mutual Fund within June 29, 2023 till July 28, 2023 at applicable NAV, without payment of any exit load. Existing investors who agree to the merger may remain invested in their respective schemes.
The units of the surviving scheme distributed to the merging scheme's unitholders are to be considered new subscriptions to the surviving scheme. This does not qualify as a transfer and is therefore exempt from capital gains tax. However, as per the income tax regulations the unitholders may require to pay capital gains if they decide to redeem their units.