Description

ICICI Prudential Passive Multi-Asset Fund of Funds grandfathered effective January 27, 2026. Fresh subscriptions, SIPs, and STPs discontinued; scheme to be merged or wound up within 3 years.

Summary

ICICI Prudential Asset Management Company has announced the grandfathering of ICICI Prudential Passive Multi-Asset Fund of Funds effective January 27, 2026, pursuant to SEBI’s Framework for Fund of Fund schemes. The scheme could not be classified under any category specified in the framework and will be merged or wound up within 3 years from January 20, 2026. Fresh subscriptions through lump sum, SIP, or STP modes will be discontinued from January 27, 2026, while existing SIPs/STPs will cease from February 5, 2026. Redemptions and switch-outs remain unaffected.

Key Points

  • Scheme grandfathered effective January 27, 2026 under SEBI’s FOF framework dated February 6, 2025
  • Mandatory merger or winding up required within 3 years from January 20, 2026
  • No fresh subscriptions accepted through lump sum, SIP, or STP from January 27, 2026
  • Purchase or switch-in transactions timestamped on or before 3:00 PM on January 23, 2026 will be processed at applicable NAV
  • Existing SIP/STP and IDCW reinvestment options discontinued from February 5, 2026
  • IDCW reinvestment option automatically changed to IDCW payout
  • Redemptions, switch-outs, STP-Out, and SWP will continue without restrictions
  • Scheme will continue to adhere to existing SID and KIM provisions

Regulatory Changes

SEBI’s letter to AMFI dated February 6, 2025 introduced a new Framework for launching Fund of Fund schemes with multiple underlying funds. Under this framework, schemes must fit into specified categories. ICICI Prudential Passive Multi-Asset Fund of Funds could not be classified under any of these categories, requiring grandfathering. SEBI’s letter dated January 20, 2026 granted permission for grandfathering, setting a 3-year timeline for scheme closure through merger or winding up.

Compliance Requirements

  • AMC must not accept any fresh subscriptions (lump sum, SIP, or STP) from January 27, 2026
  • All existing SIPs and STPs must be discontinued by February 5, 2026
  • IDCW reinvestment option must be converted to IDCW payout
  • AMC must ensure scheme merger or winding up within 3 years from January 20, 2026 (by January 20, 2029)
  • Scheme must continue adhering to applicable regulatory guidelines and SID/KIM provisions during grandfathering period
  • Investors must be notified of these changes through proper disclosures

Important Dates

  • January 20, 2026: SEBI granted grandfathering permission; 3-year countdown begins for scheme closure
  • January 22, 2026: Notice issued to investors
  • January 23, 2026, 3:00 PM: Cut-off for purchase/switch-in transactions to be accepted
  • January 27, 2026: Effective date of grandfathering; fresh subscriptions discontinued
  • February 5, 2026: Existing SIPs/STPs and IDCW reinvestment discontinued
  • January 20, 2029: Deadline for scheme merger or winding up (3 years from grandfathering approval)

Impact Assessment

Impact on Investors:

  • Existing investors can continue holding units but cannot make additional investments
  • Automatic discontinuation of ongoing SIPs/STPs from February 5, 2026 disrupts systematic investment plans
  • IDCW reinvestment converted to payout affects compounding strategy for some investors
  • Investors have full redemption flexibility and can exit anytime without restrictions
  • Investors must plan for eventual scheme closure within 3 years

Impact on Market:

  • Reflects regulatory tightening on FOF schemes with multiple asset classes
  • Sets precedent for other non-compliant FOF schemes that may face similar grandfathering
  • No immediate market disruption as redemptions continue normally
  • Scheme AUM will gradually decline due to lack of fresh inflows and natural redemptions

Operational Impact:

  • AMC must modify systems to block fresh subscriptions while allowing redemptions
  • Investor servicing complexity increases with separate treatment for subscriptions vs redemptions
  • AMC must plan merger/winding up strategy within the 3-year window
  • Potential costs associated with scheme closure to be borne by AMC or remaining investors

Impact Justification

Significant operational change affecting existing mutual fund scheme with mandatory closure within 3 years. Investors cannot make fresh investments and existing SIPs/STPs will be discontinued.