Exciting changes are on the way for investors with Baroda BNP Paribas Mutual Fund. The fund house has announced two major mergers that will be effective from September 11, 2024.
BNP Paribas and Baroda were two separate AMCs that merged in March 2022 to form Baroda BNP Paribas Mutual Fund. As of June 2024, the fund house holds an AUM of ₹39,957.24 crores and manages approximately 34 schemes.
Let’s dive into the blog to find out what this merger brings to your portfolio.
An In-Depth Look at Baroda BNP Paribas Mutual Fund Mergers
This change was communicated to current unitholders through a recent notice-cum-addendum sent via email. For investors, this announcement not only signals a shift in their investment landscape but also offers an opportunity to reassess their portfolios.
There are two major mergers happening, which are as follows:
| Fund 1 | Fund 2 | Merger /Survivor Fund |
| Baroda BNP Paribas Floater Fund | Baroda BNP Paribas Money Market Fund | Money Market Fund |
| Baroda BNP Paribas Medium duration fund | Baroda BNP Paribas Credit risk fund | Baroda BNP Paribas Credit risk fund |
Baroda BNP Paribas Floater Fund to Merge with Baroda BNP Paribas Money Market Fund
Floater Fund – It is an open-ended debt scheme that invests in bonds which have a floating interest rate. If interest rates go up, then bond prices move down and reduce returns for the investors and vice versa.
Money Market Fund- It is an open-ended debt scheme that invests in money market instruments with maturity no longer than 12 months.
Baroda BNP Paribas Medium Duration Fund to Merge with Baroda BNP Paribas Credit Risk Fund
Medium Duration Fund – It is an open-ended medium-term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between three and four years.
Credit risk Fund- It is an open-ended debt scheme predominantly investing in AA and below rated corporate bonds (excluding AA+ rated corporate bonds) with a relatively high-interest rate risk and high credit risk.
Merger fund (Baroda BNP Paribas Credit Risk Fund)
The Medium Duration Fund will cease to exist as of the effective date. Unit holders of the merging scheme will have their units automatically converted to the surviving fund, credit Risk Fund. This conversion will be based on the last available Net Asset Value (NAV) or on the Face Value of the units. The transition ensures that investments are seamlessly moved into the surviving scheme, maintaining continuity for investors.
Strategy Remains Unchanged
Baroda BNP Paribas Mutual Fund house has promised that there will be no change in the Investment Objective, strategy, asset allocation or annual scheme expenses of the surviving scheme. This means that the structure of the investments will change but the underlying strategy and risk profile of the surviving scheme remains unchanged
Exit: No-Penalty Withdrawal Option
As part of regulatory guidelines, the fund must provide investors not interested in the merger with an option to exit the investment from the scheme. Therefore, Baroda BNP Paribas Mutual Fund has provided its investors with a 30-day exit window period, from 12 August 2024 to 10 September 2024. Investors can redeem their funds during this period without any penalty.
Investors who are interested in the merger can stay invested, and their investment will automatically be reflected in the new fund at the current NAV.
Investor Insights
These two mergers will be effective from 12 September 2024.
Investors need to assess whether the surviving schemes align with their risk tolerance and financial goals. If an investor believes the surviving schemes match their goals, they can stay invested; otherwise, they can use the exit option within the window period provided by the Baroda BNP Paribas Mutual Fund AMC to avoid any penalties. Before making any decisions, it is advisable to conduct thorough research or consult a financial advisor for recommendations.
