August 26, 2022
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Merger Of 3 Tata MF schemes with Tata Corporate bond fund
The Trustees of Tata Mutual Fund have approved the proposal to merge Tata
Medium Term Fund, Tata Income Fund and Tata Dynamic Bond Fund with Tata Corporate Bond Fund.
Fixed Income Fund categories – Perspective
Tata Corporate Bond Fund has a mandate to invest at least 80% of its assets in Corporate Bond rated AA+ & above. Apart from credit quality exposure limit the Scheme does not have any duration limits enabling it to implement Duration as well accrual strategy. Corporate Bond Fund category is the 2 nd largest open ended Debt Fund category in the industry after Liquid Funds. AUM Flows into Corporate Bond category have been a significant percentage of Industry debt Net flows (excluding Liquid category)
The combined AUM of our Funds in the above mentioned 3 categories is closer to 300 crs forming
approximately under 1% of our total AUM.
We believe a merger of the 3 schemes (Tata Medium Term Fund, Tata Income Fund and Tata Dynamic Bond Fund) into Tata Corporate Bond Fund shall enable us to achieve economies of Scale and also help investors to shift money from duration funds to Corporate Bond Fund which has the flexibility to invest across duration and quality portfolio exposure.
Rationale to merge Schemes
a.To provide investor in the Schemes an alternative to invest in Tata Corporate Bond Fund portfolio which is a quality portfolio focused largely on AAA rated portfolio with similar strategy of generating predominantly accrual returns.
b.Due to smaller size of the Schemes, the investors may get impacted by a large flow of money under stressful market conditions
c.Quality portfolio with duration flexibility in Tata Corporate Bond Fund
d.Merger of the Schemes may provide investors benefit of size in the new fund without any change in the
intended portfolio strategy for the investors.
Key Dates
• Record date of the Merger: 24th September 2022 (Saturday)
• Load Free Exit Period: 23rd August 2022 to 23rd September 2022
• Notice Ad in newspaper announcing merger: 22nd August 2022
• SIP, STP, Ongoing subscription in merging schemes (Tata Dynamic Bond Fund, Tata Income Fund , Tata
Medium Term Fund) to be suspended wef 23rd August 2022
• SWP from the merging schemes (Tata Dynamic Bond Fund, Tata Income Fund and Tata Medium Term
Fund) to continue till 23rd September 2022
• The investor may choose to exit from the merging schemes (Tata Dynamic Bond Fund, Tata Income Fund and Tata Medium Term Fund) by submitting a request for redemption or switch to any of our existing schemes at the prevailing NAV without payment of exit load from 23 August, 2022 to 23 September, 2022 (upto 3.00 p.m.)
• Redemption / switch out from the merging schemes (Tata Dynamic Bond Fund, Tata Income Fund and Tata Medium Term Fund) to continue till 23rd September 2022