Over dozen schemes merge as Sundaram acquires Principal MF

BL Research Bureau

About a year since first announcing the deal, Sundaram MF is taking over Principal MF. For unit holders, it is more important to know about the change in fundamental attributes of specific schemes of Principal MF and the merger of certain schemes of Principal MF with existing schemes of Sundaram MF and vice versa. These come into effect on and from the close of business hours on December 31, 2021. As per information provided by the fund-houses, about ten fund mergers are happening in the equity-oriented category, four fund mergers in the liquid and debt-oriented category and one fund merger in fund of funds category.

Equity schemes

Principal Emerging Bluechip (₹3,124 crore) will be merged into Sundaram Large and Mid (₹1,823 crore) and the surviving fund (Sundaram Large and Midcap) will have nearly ₹5,000 crore assets. Sundaram Equity Hybrid (₹1,954 crore) will be merged into Principal Equity Hybrid (₹1,072 crore) and the surviving scheme will be renamed as Sundaram Aggressive Hybrid (new name) with over ₹3,026 crore assets. Sundaram Balanced (₹1,247 crore) and Principal Balanced (₹298 crore) will be merged, and the surviving scheme will be Sundaram Balanced with ₹1,546 crore assets. The merger of Sundaram Equity (₹828 crore) and Principal Multi Cap (₹857 crore) will result in Sundaram Multi-Cap (new name) surviving with ₹1,685 crore assets.

In the case of Sundaram Select Focus, it is getting merged into Sundaram Bluechip, and the new name of the surviving fund is Sundaram Large Cap. The proposed merger of Sundaram Select Focus Fund with Sundaram Bluechip Fund came into effect from the close of business hours on 24/12/2021. Also, Principal Large Cap is getting merged into Sundaram Large Cap (₹1,744 crore), which will be the surviving scheme.

Likewise, Sundaram Arbitrage Fund and Principal Arbitrage Fund combine with Sundaram Arbitrage Fund surviving. Sundaram Equity Savings and Principal Equity Savings merge, with Sundaram Equity Savings surviving. Sundaram Smart Nifty 100 Equal Weight and Principal Nifty 100 Equal Weight combine, with Sundaram Nifty 100 Equal Weight being the surviving scheme. Principal Small Cap (₹513 crore) and Sundaram Small Cap (₹1,529 crore) merge, with Sundaram Small Cap (₹2,042 crore) being the surviving scheme. Also, Principal Mid-Cap merges into Sundaram Mid-Cap, with the surviving scheme i.e. Sundaram Mid Cap poised to have over ₹7,200 crore assets.

Debt schemes

In the case of liquid and debt oriented schemes, there is less of hassle and mergers because Principal MF was a predominantly equity oriented fund-house. Sundaram Money and Principal Cash will combine, with Sundaram Liquid being the new name of the survivor. Since the Principal Cash Management Fund does not have an unclaimed plan, it is proposed to introduce Unclaimed Plan with four options in the surviving scheme, Sundaram Liquid Fund – (i) Unclaimed Dividend less than three years; (ii) Unclaimed Dividend more than three years; (iii) Unclaimed Redemption less than three years and (iv) Unclaimed Redemption more than three years. All units held in transferor scheme, Sundaram Money Fund – Unclaimed Plan, will be transferred to the corresponding new plan in Sundaram Liquid Fund at the initial NAV of ₹1,000 each. The unclaimed amounts currently held in Principal Unclaimed Dividend and Redemption amount will be transferred to Sundaram Liquid Fund separately. Units will be allotted in the Sundaram Liquid Fund – Unclaimed Plan at the initial NAV of ₹1,000 each.

Sundaram Low Duration and Principal Low Duration merge, with Sundaram Low Duration (with combined ₹607 crore assets) being the surviving scheme. Sundaram Short Term Debt and Principal Short Term merge, with Sundaram Short Duration being the survivor. Sundaram Ultra Short and Principal Ultra Short merge, with Sundaram Ultra Short (nearly ₹1400 crore in combined assets) being the surviving scheme.

In FoF space, Principal Global Brand Opp. merges with Sundaram Global Brand, with Sundaram Global Brand being the survivor.

What else

Do note that there are at least three schemes with investors assets worth nearly ₹1,500 crore of Principal MF such as Principal Focused Multicap Fund (₹677 crore), Principal Dividend Yield Fund (₹231 crore) and Principal Tax Savings Fund (₹588 crore) which will be carried over by Sundaram MF and there will be no change in character or features of the schemes except the name.

Unitholders of Sundaram Diversified Equity Fund (₹2,077 crore), an ELSS scheme, should note that as per ELSS guidelines, only one open-ended scheme would be permitted. Given the restriction, Sundaram MF proposes to stop the subscription into the Sundaram Diversified Equity Fund, i.e. no SIP, STP-in, DTP-in, or switch into the fund will be allowed post the effective date. However, investors will be permitted to redeem/switch their eligible units held for more than three years.

Sundaram AMC and Sundaram Trustee have decided that December 30, 2021 and December 31, 2021 will be non-business days for all schemes of Sundaram MF for transactions routed through the stock exchange platform in Demat mode. Accordingly, all requests for subscription, redemption, switch or any other transaction received on the above-mentioned dates in the schemes of Sundaram MF will be rejected. SIP instalments falling due on these dates will be carried forward for processing on the next business day. Insta redemption facility currently available in Sundaram Money Fund will be temporarily discontinued post 3:00 pm on December 30, 2021, because the said merger until further notice.

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