Tata Mutual Fund has announced the merger of Tata Banking & PSU Debt Fund with Tata Corporate Bond Fund. The two schemes will be merged and Tata Corporate Bond Fund will be the surviving scheme.
The fund house informed about this to its unit holders through a notice-cum-addendum. The merger will be effective from June 15. From this date, Tata Banking & PSU Debt Fund will cease to exist and the unitholders of the scheme will become unitholders of Tata Corporate Bond Fund.
The fund house mentioned that the exit option of 30 days, at prevailing NAV, without exit load will be given to the unitholders of merging scheme i.e. Tata Banking & PSU Debt Fund and to the unitholders of Tata Corporate Bond Fund (i.e. surviving scheme).
The sale of units of Tata Banking & PSU Debt Fund (Transferor Scheme) (including switch-in & registration of systematic investment options) will stand suspended with effect from 11 May, 2024.
Further the fund house informed that a written communication shall be sent to all unitholders of all the concerned schemes informing the details about the merger including, basis of allocation of units in Tata Corporate Bond Fund – tax implication and financial information of the scheme.
Investors in Income Distribution cum Capital Withdrawal Option (IDCW-Payout & Reinvestment) of Tata Banking & PSU Debt Fund – (Regular Plan & Direct Plan) would be allotted units in the Income Distribution cum Capital Withdrawal Option (IDCW-Periodic – Payout & Periodic Reinvestment) option of Tata Corporate Bond Fund – (Regular Plan & Direct Plan).
Investors in the growth option of Tata Banking & PSU Debt Fund – (Regular & Direct Plan) would be allotted units in the growth option of Tata Corporate Bond Fund (Regular Plan & Direct Plan) in lieu of their holding at closing Net Asset Value (NAV) of record date.
In terms of prevailing regulatory requirements, unitholders in Tata Banking & PSU Debt Fund and Tata Corporate Bond Fund are given an option to exit at the prevailing Net Asset Value without any exit load, in case they are not in favour of the merger.
The period of this exit offer is from May 15 to June 14. If no request for redemption/switch is received by Tata Mutual Fund on or before June 14 (upto 3 PM) the units in Tata Banking & PSU Debt Fund will automatically be merged to Tata Corporate Bond Fund and a fresh account statement will be issued to the unitholders to that effect.
Unitholders who do not exercise the exit option during the exit period would be deemed to have consented to the proposed merger and will be allotted units without any entry load in the respective plan as mentioned above of Tata Corporate Bond Fund. Unitholders who opt to continue in the surviving scheme (i.e. Tata Corporate Bond Fund) shall be subject to the load structure of the surviving scheme prevailing on the record date of merger.
The existing Systematic Investment Plan (SIP)/Systematic Transfer Plan (STP)/ Systematic Withdrawal Plan (SWP) in the merged scheme i.e. Tata Banking & PSU Debt Fund shall stand cancelled/discontinued in the surviving scheme i.e. in Tata Corporate Bond Fund. The investors who hold units in Tata Corporate Bond Fund post the merger, have the option to register for a fresh SIP / STP / SWP from the surviving scheme, i.e. Tata Corporate Bond Fund.
Investors who have opted for Systematic Transfer Plan (STP) from Tata Banking & PSU Debt Fund to Tata Corporate Bond Fund or vice versa will stand cancelled from the date of merger of the scheme.
The unitholders who have pledged or encumbered their units will not have the option to exit unless they procure an effective release of their pledges/encumbrances prior to the redemption/switch-out requests. In case a lien is marked on the units held in Tata Banking & PSU Debt Fund, the fresh units allotted in Tata Corporate Bond Fund will also be automatically subject to lien. In case of lien of units in demat mode, investors are requested to ensure revocation of lien before the record date to enable credit of proportionate units of the surviving scheme.
Tata Banking & PSU Debt Fund is an open-ended debt scheme predominantly investing in debt instruments of Banks, Public Sector Undertakings, Public Financial Institutions and Municipal Bonds with a relatively high interest rate risk and moderate credit risk. The scheme manages assets of Rs 213 crore as on April 30, 2024.
Tata Corporate Bond Fund is an open-ended debt scheme predominantly investing in AA+ and above rated corporate bonds, with flexibility of any Macaulay Duration and with relatively high interest rate risk and moderate credit risk. The scheme manages assets of Rs 1,105 crore as on April 2024.
Source: Reuters.com