Edelweiss Mutual Fund has announced the merger of its Edelweiss ETF‐Nifty Bank Fund with Edelweiss Nifty Large Midcap 250 Index Fund, effective August 7, 2023. After their union, the fund will be called Edelweiss Nifty Large Midcap 250 Index Fund. The Edelweiss ETF‐Nifty Bank Fund tracked the Nifty Bank Index, while the Nifty Large Midcap 250 Index Fund replicated the Nifty Large Midcap 250 Index.
The merger of the two funds is expected to boost liquidity and reduce costs for investors.
Edelweiss ETF‐Nifty Bank Fund's asset under management (AUM) is Rs. 1.68 crore, with 197 investors as of May 31, 2023. On the other hand, Edelweiss Nifty Large Midcap 250 Index Fund has an AUM of Rs. 49.80 crore with 5,842 investors as of May-end 2023.
Key Benefits To Unitholders
Given Edelweiss ETF Nifty Bank’s lower AUM and trading volume, the merger with Edelweiss Nifty Large Midcap 250 Index Fund will boost liquidity for investors, the fund house said in a letter to unitholders. The ease of liquidity means investors can redeem their units at will.
Edelweiss said investors’ transaction costs would reduce significantly with the merger. Retail investors will also have the option to invest without a Demat account. They also don't have to pay any brokerage since Edelweiss ETF‐Nifty Bank will become an index fund that doesn't require a Demat and broking account to exit or invest.
The fund house also claimed the merger would enable the existing investors to tap the opportunities in the large and midcap space, noting that the underlying stocks in Edelweiss ETF‐Nifty Bank are part of Edelweiss Nifty Large Midcap 250 Index Fund.
On August 7, 2023, “Edelweiss ETF‐Nifty Bank will cease to exist, and unitholders of EENB will be allotted units under Direct Plan-Growth option of ENLM250IF at the Applicable Net Asset Value (NAV),” the letter said. The units allotted to unit holders in the Surviving Scheme will be treated as fresh subscriptions.
Option To Exit
Existing unitholders of both schemes, as of June 30, 2023, have the option to exit without exit load during the Exit Option Period from July 6, 2023, to August 4, 2023, if they disagree with the merger. Redemption or switch-out of units during this period will result in capital gain/loss based on the holding period of the investment.
The surviving scheme and the merging scheme have a minimum of 95 per cent allocation in equity instruments, classifying them as ‘high-risk’ investments in scheme documents. The expenses related to the proposed changes will not be charged to unit holders.