It
might have happened to you when you wanted to invest in mutual funds but got
all confused due to numerous schemes in the capital market offered by existing
as well as ever growing mutual fund companies. In order to simplify multiple mutual
fund products available in the market, SEBI has given clear message that no new
schemes to be launched until fund houses merge their existing schemes with
similar characteristics. The Indian mutual fund industry currently manages
about 715 schemes out of which half are equity based whereas other half provide
fixed income. Earlier one scheme’s merger into another was considered as sale
resulting in capital gains in the hands of investors. But 2015-16 budget said,
merger of schemes will no longer be considered as fresh investment, a move that
had the effect of removing the tax obligation on the investor.
Comments:
The
step taken by regulator has many advantages some of which are as under:
1.
Less number of schemes will enhance
investor’s interest and awareness eventually encouraging higher capital
investment.
2.
Tracking of return would be lot easier
as comparison among different mutual funds becomes tedious task in the present
scenario.
3.
Manageable portfolio of assets, i.e. MFs
would be able to focus more on core assets and shredding non-core assets, hence
increasing returns.
4.
Lesser promotion and advertisement
costs.
5. Lesser schemes = Increased accountability,
disclosure