Rajinder Goel! Does this name ring any bell? Well, he was the highest wicket taker in the history of Ranji Trophy. Next to him was Siva who stands a distant second with 100 wickets less. Goel did not a chance to play for India as he was born during the era of Bedi/Chandra. He, however, played a key role in preparing Indian batsman to face quality spin bowling in domestic tournaments.
MF industry is just like Mr. Goel, which goes unnoticed. The wind favours insurance (Bedi)/ NPS (Chandra)/ broking (Prasanna)/ banks (Raghavan) over mutual funds.
By default, large part of India invests in bank FDs as there is safety and lazy comfort in FDs.
Investing in investment product of insurance is like joining Mumbai gangs. You get easy entry but cannot exit at your will. Finally, most Indians find stock investing/trading addictive. This kida bugs you continuously until you bet whatever you own.
Coming back to mutual funds, the recent SEBI regulations on NAV applicability from Feb 01, 2021 will affect the growth of MF industry.
Let us first see the attached charts for ‘before’ and ‘after’ changes for granular details.
|
|
Transaction Type |
Amount |
Applicable NAV before 01-Feb-21 |
Applicable NAV from 01-Feb-21 |
|
1 |
Lumpsum Purchases |
Less than Rs.2 Lakh |
Same day NAV if application is |
NAV of Business day on which money is received by the fund house before cut-off time |
|
Rs.2 Lakh and above |
NAV of Business day on which money is received by the fund house before cut-off time |
NAV of Business day on which money is received by the fund house before cut-off time |
||
|
2 |
SIP |
Less than Rs.2 Lakh |
Same day NAV if application is |
NAV of Business day on which money is received by the fund house before cut-off time |
|
Rs.2 Lakh and above |
NAV of Business day on which money is received by the fund house before cut-off time |
NAV of Business day on which money is received by the fund house before cut-off time |
||
|
3 |
Redemption / SWP |
Any amount |
Same day NAV if application is |
Same day NAV if application is |
For Switch / STP:-
|
|
|
Applicable NAV before 01-Feb-21 |
Applicable NAV from 01-Feb-21 |
||
|
Switch / STP Scheme |
Amount |
Switch Out / STP Out NAV |
Switch In NAV |
Switch Out / STP Out NAV |
Switch In NAV |
|
LIQUID to LIQUID / DEBT |
Less than Rs.2 Lakh |
Same Day NAV |
Same Day NAV |
Same Day NAV |
T+1 Day NAV |
|
Rs.2 Lakh and above |
Same Day NAV |
T+1 Day NAV |
Same Day NAV |
T+1 Day NAV |
|
|
DEBT to LIQUID / DEBT |
Less than Rs.2 Lakh |
Same Day NAV |
Same Day NAV |
Same Day NAV |
T+1 Day NAV |
|
Rs.2 Lakh and above |
Same Day NAV |
T+1 Day NAV |
Same Day NAV |
T+1 Day NAV |
|
|
LIQUID / DEBT to EQUITY |
Less than Rs.2 Lakh |
Same Day NAV |
Same Day NAV |
Same Day NAV |
T+1 Day NAV |
|
Rs.2 Lakh and above |
Same Day NAV |
T+1 Day NAV |
Same Day NAV |
T+1 Day NAV |
|
|
EQUITY to LIQUID / DEBT |
Less than Rs.2 Lakh |
Same Day NAV |
Same Day NAV |
Same Day NAV |
T+3 Day NAV |
|
Rs.2 Lakh and above |
Same Day NAV |
T+3 Day NAV |
Same Day NAV |
T+3 Day NAV |
|
Here are some key observations:
Big loss for SIP investors: SIP investors will get NAV only after AMC realizes the fund. At times, realization of funds gets delayed because of banking system.
Stock investment will gain popularity: While investors can buy stocks at prevailing prices, they cannot avail MF units in same day’s NAV
Switches get slow: Investors may have to give away a day’s gain if they switch between debt schemes.
Summing up: I think this verse is apt to describe the present condition of the MF industry.
माया को माया मिले, कर – कर लंबे हाथ
तुलसीदास गरीब की, माने ना कोई बात!
Vijai Mantri is Chief Investment Strategist and Co-Promoter, JRL Money. The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.
