The merger will be effective on November 22, 2021. Investors who are not in the merger agreement can exit and exit the FMP on the maturity date.
“Investors of the merger plan will continue to invest in debt assets, thereby potentially increasing their holding period returns and continue to enjoy indexation benefits until you decide to redeem. Enjoy the liquidity of an open-ended fund, instead of locking your investments in any other closed-ended debt fund with similar characteristics, the fund house said in a notice sent to investors.
Since both the schemes – Kotak FMP Series 246 in Kotak Corporate Bond Fund – are undergoing a change in fundamental features, the fund house has kept an exit window of one month for both the funds. Investors of both these schemes can exit the fund between October 20 and November 18 without any exit load. All exit applications from Kotak Corporate Bond Fund will be allotted are not Of the day FMP exit applications will be allotted a NAV-maturity date of November 22.
The average maturity of Kotak Corporate Bond Fund is hovering between 2.74 years to 2 years in the last 12 months. No exit load is applicable in Kotak Corporate Bond Fund. Kotak Corporate Bond Fund has been a good performer in the past. The scheme has outperformed its benchmark over a period of 1, 3 and 5 years. Since inception, the scheme has offered 8.62% returns and manages assets worth Rs 10,541 crore.
However, whether or not you should stick with this merger is a question that has different answers for different investors.
“Kotak Corporate Bonds is a very capable debt fund, with a stellar track record. The existing debt papers in Kotak Corporate Bonds are of extremely high quality (around 95% in Sovereign/AAA/equivalent). However, if an investor opts out Wants, they have to instruct for the same. This is where I believe they are being scaled down a bit. You entered a product with an auto-maturity option and that’s what it should have been I also hope that this does not become a precedent. If someone needs money in the next 1 year, it is best to redeem it now and invest in any liquid fund. However, if you have at least With an investment horizon of 2-3 years, Kotak Corporate Bonds would not be a bad option, says Subir Jha, founder, Hyderabad-based money management firm Buckspeak.
Jha believes that the merger is a move to keep the assets with the fund house. “From an investor’s point of view, if one goes for merger, he/she gets a tax ‘benefit’. The transaction will not be treated as redemption and hence will not attract any long-term capital gains tax (one needs to be considered for the final calculation). Consult a tax expert),” says Jha.