Description

Edelweiss Mutual Fund announces merger of CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund with Banking and PSU Debt Fund, effective October 31, 2025.

Summary

Edelweiss Trusteeship Company Limited has approved the merger of Edelweiss CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund (Merging Scheme) with Edelweiss Banking and PSU Debt Fund (Transferee Scheme). The merger will be effective on October 31, 2025, which is the maturity date of the Merging Scheme. Unit holders have the option to provide consent or exit during the period from September 30, 2025 to October 29, 2025.

Key Points

  • Merging Scheme: Edelweiss CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund (open-ended target maturity index fund)
  • Transferee Scheme: Edelweiss Banking and PSU Debt Fund (open-ended debt scheme)
  • Effective Date: October 31, 2025 (or next business day if non-business day)
  • Consent/Exit Period: September 30, 2025 to October 29, 2025 (both days inclusive)
  • Merging Scheme has ~50% AUM in AAA-rated CPSE bonds and remaining in State Development Loans (SDLs)
  • Transferee Scheme has ~78% exposure to AAA-rated CPSE bonds and AAA-rated banks, with remaining in government bonds

Regulatory Changes

No regulatory changes. This is a scheme merger notification as per SEBI mutual fund regulations.

Compliance Requirements

  • Unit holders of the Merging Scheme must provide consent or exercise exit option during the specified period (September 30 to October 29, 2025)
  • Unit holders who do not respond will be deemed to have consented to the merger
  • Tax treatment: Per Section 47(xviii) of Income Tax Act 1961, allotment of units in Transferee Scheme will not be considered redemption and will not result in capital gains/losses for continuing unit holders

Important Dates

  • September 30, 2025: Consent/Exit Option Period begins
  • October 29, 2025: Consent/Exit Option Period ends
  • October 31, 2025: Effective date of merger (maturity date of Merging Scheme)

Impact Assessment

Benefits for Unit Holders:

  1. Credit Quality: Comparable credit quality with higher exposure to AAA-rated CPSE and bank bonds (~78%) in Transferee Scheme
  2. Liquidity Risk Mitigation: Superior liquidity due to exposure to more liquid CPSE bonds and government bonds
  3. Reinvestment Risk Mitigation: Eliminates reinvestment risk as Transferee Scheme is open-ended without fixed maturity date
  4. Active Management: Benefits from active duration management based on market conditions
  5. Diversification: Enhanced portfolio diversification across AAA-rated CPSE and bank bonds, maturity buckets, and CPSE segments
  6. Tax Efficiency: Merger maintains tax efficiency without triggering capital gains for continuing investors
  7. Asset Allocation: Continued exposure to similar high-quality debt instruments (AAA-rated CPSE bonds, bank bonds, sovereign bonds)

Impact: Medium - affects unit holders of specific target maturity fund who must take action during consent period, but provides clear migration path to similar debt scheme with enhanced benefits.

Impact Justification

Impacts unit holders of Edelweiss CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund who must provide consent or exit by October 29, 2025. Provides continuity for investors through merger with similar debt scheme.