Description

Edelweiss Mutual Fund announces merger of CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund into 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 (target maturity index fund) with Edelweiss Banking and PSU Debt Fund (open-ended debt scheme). The merger will be effective on October 31, 2025, coinciding with the maturity date of the merging scheme. Unit holders have been provided a consent/exit option 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 investing in CRISIL [IBX] 50:50 PSU + SDL Index – October 2025)
  • Transferee Scheme: Edelweiss Banking and PSU Debt Fund (open-ended debt scheme investing in debt instruments of banks, PSUs, public financial institutions, and municipal bonds)
  • 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)
  • Credit Quality: Merging scheme has ~50% in AAA-rated CPSE bonds and remaining in SDLs; Transferee scheme has ~78% in AAA-rated CPSE bonds and AAA-rated banks
  • Tax Treatment: Under 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

Regulatory Changes

No regulatory changes introduced. This is a scheme merger notification under existing SEBI mutual fund regulations.

Compliance Requirements

  • Unit Holders: Must provide consent or exercise exit option during the specified period (September 30 - October 29, 2025)
  • Fund House: Must complete merger process by effective date of October 31, 2025
  • Disclosure: Notice cum addendum issued to Scheme Information Document (SID) and Key Information Memorandum (KIM)

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

Rationale for Merger:

  1. Comparable Credit Quality: Both schemes maintain high credit standards with AAA-rated exposures and government securities
  2. Improved Liquidity: Transferee scheme offers superior liquidity through exposure to more liquid CPSE bonds and government bonds
  3. Reinvestment Risk Mitigation: Merger eliminates reinvestment risk associated with target maturity fund’s fixed maturity date
  4. Active Management Benefits: Investors gain from active duration management based on market conditions
  5. Enhanced Diversification: Broader portfolio with diversified exposure across AAA-rated CPSE bonds, bank bonds, and various maturity buckets
  6. Tax Efficiency: Continuing investors maintain tax efficiency as merger does not trigger capital gains under section 47(xviii) of Income Tax Act 1961

Impact on Investors:

  • Unit holders of merging scheme must decide whether to consent to merger or exit during option period
  • Those consenting will receive units in transferee scheme without tax implications
  • Portfolio shifts from target maturity structure to open-ended active management approach
  • Credit profile remains strong with potential liquidity improvements

Impact Justification

Affects investors in Edelweiss CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund; offers option to consent or exit; maintains tax efficiency under section 47(xviii) of Income Tax Act.