Last October, the market regulator came up with a circular to rationalise and re-categorise schemes. The aim was to reduce the number of schemes and bring in uniformity in fund structure across fund houses.
Although many fund houses have completed their merger and consolidation exercise, the number of open-ended schemes has in fact increased marginally.
The latest AMFI data shows that the industry has 840 open-ended schemes as on April 2018 as compared to 830 in September 2017, when SEBI issued the circular on scheme merger and consolidation.
Of these 840 schemes, the industry has 401 schemes in equity category which includes pure equity, balanced, arbitrage and tax savings schemes. The number of equity schemes was 390 in September 2017.
Swarup Mohanty, CEO, Mirae Asset Mutual Fund thinks that investors should not focus on the number of schemes. “The increased number of open-ended scheme is not an issue as long as you have uniform product basket across the category. Earlier, we did not have fund pre-defined categories. Now, investors have 16 categories in equity funds. However, we have to see if the consolidation exercise has adversely affected investors,” said Mohanty.
Seconding him, Sundeep Sikka, ED and CEO, Reliance Nippon Life Mutual Fund said, “The main purpose of SEBI’s circular was to simplify the scheme categories. It has nothing to do with reducing the number of schemes. In my view, the number of schemes has increased due to new launches. A few fund houses may have launched new schemes to complete their product basket.”
A few experts believe that SEBI has partially met the objectives of the circular. “Scheme mergers have been very low. SEBI has clearly stated that the intention is to reduce duplication. However, many fund houses have found enough categories to either form a new fund or launch new ones,” said Vidya Bala, Head of Mutual Fund Research, Fundsindia.com.
