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, with consent period from September 30 to October 29, 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 is scheduled for October 31, 2025, with unitholders given a consent/exit option period from September 30, 2025 to October 29, 2025. The merger aims to provide investors with better credit quality, improved liquidity, active management benefits, and mitigation of reinvestment risk while maintaining tax efficiency.

Key Points

  • Merging Scheme: Edelweiss CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund (target maturity fund investing in PSU bonds and State Development Loans)
  • Transferee Scheme: Edelweiss Banking and PSU Debt Fund (open-ended debt scheme)
  • Effective merger date: October 31, 2025 (or next business day if non-business day)
  • Merging Scheme has ~50% exposure to AAA-rated CPSE bonds and ~50% in State Development Loans
  • Transferee Scheme has ~78% exposure to AAA-rated CPSE and bank bonds, with remaining in government bonds
  • Merger provides enhanced credit quality, superior liquidity, and diversification benefits
  • Active duration management will be available post-merger versus passive index tracking
  • Tax efficiency maintained under Section 47(xviii) of Income-tax Act, 1961

Regulatory Changes

This is a scheme merger notice and addendum to the Scheme Information Document (SID) and Key Information Memorandum (KIM) of Edelweiss Mutual Fund schemes. The merger has been approved by the Trustee in accordance with SEBI mutual fund regulations governing scheme mergers.

Compliance Requirements

  • Unitholders must provide consent or exercise exit option during the specified period: September 30, 2025 to October 29, 2025 (both days inclusive)
  • Unitholders who do not respond during the consent period will have their units automatically transferred to the Transferee Scheme on the effective date
  • Unitholders who wish to exit can redeem their units during the consent/exit option period without any exit load
  • The merger requires compliance with SEBI regulations on scheme mergers and unitholder communication

Important Dates

  • Consent/Exit Option Period Start: September 30, 2025 (Tuesday)
  • Consent/Exit Option Period End: October 29, 2025 (Wednesday)
  • Effective Merger Date: October 31, 2025 (or next business day if declared non-business day)
  • Maturity Date of Merging Scheme: October 31, 2025

Impact Assessment

Investor Impact: Unitholders of the merging scheme will transition from a passive target maturity index fund to an actively managed open-ended debt fund. This provides several benefits including elimination of reinvestment risk associated with the fixed maturity date, access to active management strategies, improved portfolio liquidity through exposure to more liquid CPSE and bank bonds, and enhanced diversification across AAA-rated instruments.

Credit Quality Impact: The merger maintains high credit quality with the Transferee Scheme offering higher exposure to AAA-rated instruments (78% in AAA CPSE and bank bonds) compared to the Merging Scheme’s 50% AAA-rated CPSE exposure.

Liquidity Impact: Investors gain access to more liquid instruments including liquid government bonds and more liquid segments of CPSE and bank bonds, reducing liquidity risk.

Tax Impact: The merger is structured to be tax-efficient under Section 47(xviii) of the Income-tax Act, 1961, with unit allotment in the Transferee Scheme not considered as redemption for continuing investors.

Market Impact: Limited broader market impact as this is a scheme-specific reorganization affecting only the unitholders of these two Edelweiss Mutual Fund schemes.

Impact Justification

Scheme merger affects investors of specific mutual fund schemes with option to consent or exit. Material event for unitholders but limited broader market impact.