Description

SEBI approved merger of HSBC Tax saver Equity Fund into HSBC Flexi Cap Fund, effective January 23, 2026, with no changes to the surviving scheme.

Summary

HSBC Asset Management (India) Private Limited and HSBC Trustees (India) Private Limited have announced the merger of HSBC Tax saver Equity Fund (Merging Scheme) into HSBC Flexi Cap Fund (Surviving Scheme), effective January 23, 2026. SEBI granted no objection to the merger on December 01, 2025, under Regulation 18(15A) of SEBI (Mutual Funds) Regulations, 1996. The merger represents a fundamental change in scheme attributes, converting an ELSS fund with statutory 3-year lock-in and tax benefits into a flexi cap fund with no lock-in period.

Key Points

  • HSBC Tax saver Equity Fund (ELSS) will merge into HSBC Flexi Cap Fund
  • SEBI no objection received on December 01, 2025
  • Merger approved under Regulation 18(15A) of SEBI MF Regulations, 1996
  • Surviving scheme (HSBC Flexi Cap Fund) will retain its name and attributes unchanged
  • No exit option for surviving scheme unitholders as their interests are not adversely affected
  • Merging scheme changes from ELSS category to Flexi Cap Fund category
  • Lock-in period of 3 years applicable to ELSS will no longer apply post-merger
  • Tax benefit feature of ELSS fund will be discontinued
  • Investment approach changes from “no capitalization bias” to “dynamic across market capitalizations”

Regulatory Changes

The merger is executed in accordance with Regulation 18(15A) of the SEBI (Mutual Funds) Regulations, 1996, which governs fundamental attribute changes in mutual fund schemes. SEBI’s no objection dated December 01, 2025 confirms regulatory compliance for this scheme consolidation.

Compliance Requirements

  • Board of Directors of HSBC Asset Management (India) Private Limited has approved the merger proposal
  • Board of Directors of HSBC Trustees (India) Private Limited has approved the merger proposal
  • SEBI no objection obtained as required under MF Regulations
  • Unitholders of merging scheme will be transitioned to surviving scheme
  • No action required from surviving scheme unitholders (no exit option applicable)
  • Scheme Information Document (SID) of surviving scheme remains unchanged

Important Dates

  • December 01, 2025: SEBI granted no objection to the merger
  • January 23, 2026: Effective date for merger (or next business day if non-business day)

Impact Assessment

Impact on Merging Scheme (HSBC Tax Saver Equity Fund) Investors:

  • Fundamental change in scheme category from ELSS to Flexi Cap Fund
  • Loss of ELSS-specific benefits: 3-year statutory lock-in period and tax benefits under Section 80C
  • Change in investment objective from “diversified portfolio with no capitalization bias” to “dynamic investments across market capitalizations”
  • Shift from open-ended ELSS to open-ended flexi cap scheme without lock-in
  • Asset allocation changes: Merging scheme had 80-100% equity allocation; specific allocation pattern of surviving scheme not fully detailed in excerpt

Impact on Surviving Scheme (HSBC Flexi Cap Fund) Investors:

  • No changes to scheme name, investment objective, asset allocation, or expense ratio
  • No exit option provided as their interests are not adversely affected
  • Potential increase in scheme AUM due to merger

Market Impact:

  • Consolidation of HSBC Mutual Fund scheme offerings on BSE StAR MF Platform
  • Reduction in ELSS fund options for investors seeking tax-saving equity investments
  • Streamlining of product portfolio by HSBC Asset Management

Impact Justification

Scheme merger affects HSBC Tax Saver Equity Fund investors who will be moved to HSBC Flexi Cap Fund. Material change in fundamental attributes from ELSS with 3-year lock-in to Flexi Cap Fund. SEBI approved under Regulation 18(15A).