Description

DSP Credit Risk Fund re-opens for subscriptions from January 1, 2026 with investment cap of INR 10 crore per PAN and revised exit load structure of 3% for redemptions within 12 months.

Summary

DSP Mutual Fund has announced the removal of temporary suspension on fresh subscriptions for DSP Credit Risk Fund, effective January 1, 2026. The scheme, which was suspended for all fresh purchases, additional purchases, and systematic transactions since December 16, 2021, will now accept subscriptions subject to an investment cap of INR 10 crore per PAN and a revised exit load structure with 3% charges for redemptions within 12 months.

Key Points

  • Subscription suspension lifted effective January 1, 2026
  • Investment cap of INR 10 crore per PAN (including existing investments and fresh inflows)
  • Cap applies to all transactions including Switch-in/SIP/STP-in
  • Revised exit load: 3% for redemptions within 12 months (increased from previous 1% for excess redemptions)
  • No exit load for redemptions after 12 months from allotment date
  • Previous exit load structure had nil charge for first 10% redemption within 12 months
  • Exit load exemption for Direct-Regular plan switches
  • Designated Employees exempted from these requirements under SEBI alignment of interest circular

Regulatory Changes

The revised exit load structure represents a significant change from the existing framework:

Previous Structure:

  • Nil exit load for redemptions up to 10% within 12 months
  • 1% exit load for redemptions exceeding 10% within 12 months
  • Nil exit load after 12 months

New Structure (Effective January 1, 2026):

  • 3% exit load for all redemptions within 12 months from allotment date
  • Nil exit load for redemptions on or after 12 months

The changes apply to all prospective investments including systematic transactions registered on or after the effective date.

Compliance Requirements

  • Total investment per PAN must not exceed INR 10 crore (cumulative of existing and new investments)
  • Exit load as per revised structure will apply to new subscriptions from January 1, 2026
  • For systematic transactions (SIP, STP), the exit load prevailing at registration/enrolment date applies
  • Unit holders should update PAN, KYC, email, mobile number, and nominee details with AMC
  • Unit holders advised to link PAN with Aadhaar Number
  • Investors should check for unclaimed redemptions or IDCW payments
  • Scheme Information Document (SID) and Key Information Memorandum (KIM) amended accordingly

Important Dates

  • December 15, 2021: Original suspension notice issued
  • December 16, 2021: Subscriptions temporarily suspended
  • December 26, 2025: Notice cum addendum issued by DSP Asset Managers
  • January 1, 2026: Effective date for re-opening of subscriptions with new conditions

Impact Assessment

The re-opening of DSP Credit Risk Fund has mixed implications:

Positive Impact:

  • Restores investor access to credit risk investment strategy after 4+ years
  • Allows portfolio diversification for investors seeking debt market exposure
  • Signals AMC confidence in managing credit risk portfolio

Restrictive Measures:

  • INR 10 crore cap limits large institutional and HNI participation
  • Significantly higher exit load (3% vs previous 1%) increases cost of liquidity
  • Removal of 10% free exit window reduces flexibility for investors
  • Higher exit barriers may discourage short-term investors

Investor Considerations:

  • Higher exit load suggests AMC desire to ensure stable, long-term capital base
  • Investment cap indicates controlled growth approach to manage liquidity risks
  • Investors should evaluate 12-month lock-in implications given credit market volatility
  • Exemptions for designated employees ensure regulatory compliance without conflicts

Impact Justification

Affects investors in DSP Credit Risk Fund with significant changes to exit load structure and investment caps, but limited to single mutual fund scheme