can decide to wind down for many reasons. Over the years, several Indian and international fund houses have entered the market and later chosen to leave it. Nobody can predict these events with certainty, but they rarely happen overnight, and they never happen without oversight.<\/span><\/p>\nTwo situations are worth understanding:<\/b><\/p>\n\n- Winding up:<\/b> A scheme may be wound up under specified circumstances, including a decision by the trustees, a resolution by 75% of unit holders, or a direction from SEBI in the interest of unit holders. The scheme’s assets are then realised and the proceeds, after applicable liabilities and expenses, are distributed to investors.<\/span><\/li>\n
- Sale or merger:<\/b> An AMC may undergo a change in control, or schemes may be merged or consolidated. Such changes are subject to SEBI’s prescribed regulatory framework, approvals and investor-protection requirements.<\/span><\/li>\n<\/ul>\n
In each case, one principle stays constant. Where an applicable exit option is provided, investors can redeem their units at the prevailing NAV without paying the applicable exit load.<\/span><\/p>\nWhen a Fund House Sells Its Business<\/b><\/h2>\n
The most common form of AMC exit is a fund house selling its business and leaving the industry. This usually plays out in one of three ways.<\/span>
\n<\/p>\n\n
\n\n\n| Scenario<\/th>\n | What happens<\/th>\n | Real-world example<\/th>\n<\/tr>\n<\/thead>\n |
\n\n| Sold to another fund house<\/td>\n | The buyer may close the scheme, keep it running, or merge it with a similar scheme of its own<\/td>\n | L&T Mutual Fund acquired Fidelity’s India mutual fund business and folded the schemes into its own line-up<\/td>\n<\/tr>\n |
\n| Sold to a joint venture partner<\/td>\n | One partner buys out the other and takes full ownership. Names change, but management usually stays the same<\/td>\n | Nippon bought out Reliance Capital’s stake, and the fund house became Nippon India Mutual Fund<\/td>\n<\/tr>\n |
\n| Sold to a new entrant<\/td>\n | A company new to the mutual fund business takes over and keeps running the existing schemes<\/td>\n | Yes Asset Management was sold to GPL Finance and Investments, part of the White Oak group<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n <\/p>\n \u2190 Swipe horizontally to view full table \u2192<\/div>\n |