Sunday 26 December 2021

SUNDARAM MF & HSBC MF take over.. .. What should investors do ?

Do you have L&T or Principal Funds? ....then read on...

Sundaram has taken over Principal Funds.

HSBC has taken over L&T Funds.

In both the Fund Houses, the fund management team of fidelity will be there until the transition. 

L&T itself had earlier taken over Fidelity funds and did a pretty decent job


Sundaram has been an old player in the Indian Mutual fund space and has a good name amongst both investors, distributors, and advisors

Principal has pretty good funds in its portfolio and in fact, with the Principal acquisition, Sundaram will have 3 funds in TOP 10. 

Sundaram till now was more of a Midcap/Small Cap focussed fund house

Principal is more of a Large cap focussed fund house and thus this merger definitely is good for investors as well. 


The HSBC takeover of L&T is a definite surprise even for experienced people in the Mutual fund industry as most of the foreign Fund Houses (Morgan Stanley, JP Morgan, and recently Principal) have been quitting the Indian Mutual fund space and HSBC has done the reverse by going for a takeover and strengthing its presence in Indian Mutual fund space 

HSBC taking over the L&T mutual fund house shows the seriousness of HSBC towards its Mutual fund business and is definitely good news. 

HSBC has been adding good, high-quality people to its team in the recent past, showing it is indeed here for the LONG TERM  and this takeover of L&T AMC will help it gain a foothold on retail money. 


Any takeover /merger calls for caution and needs to be observed closely as there will be a definite shuffle in the Fund Management team and some funds will inevitably get merged. 
This merger could also lead to a fund that was aggressively becoming conservative and vice versa.
If this happens, then there is a definite need to have a RE-LOOK into continuing the investments 
or maybe even increasing the allocation. 

It also needs to be seen whether funds underlying objectives are being tinkered with. 

Also, the Fund Management Philosophy of the new team should be understood. 

Investors are encouraged to watch the performance of both the Sundaram and HSBC funds closely over the next 3 quarters before taking a decision over adding or exiting the funds. 

Do not quit or sell out in a hurry as any player who takes over will want to prove that he is indeed good and worth your trust. 

Observe this closely 
Let me give you an example : 

Japanese Fund House Daiwa fund house was taken over by SBI

A large-cap fund named Daiwa Industry Leaders fund was promptly changed to SBI Small and Midcap fund which completely disturbed an investor's portfolio allocation. 

Asset allocation went for a TOSS!!

This type of tinkering should by default lead to rebalancing in your portfolio. 

Yes, If in the funds you have, the basic objective for which you invested is tinkered with...then give it a hard look. 

You HAVE to wait for 2-3 quarters 

But if there is any change in fundamental attributes 
MOVE AWAY, especially if it is going to affect the basic reason WHY you invested in the fund 

Srikanth Matrubai
Author: Don't Retire Rich

Book available on Amazon 

All the best,
Srikanth Matrubai
Srikanth Matrubai, Author of the Amazon Best Seller DON'T RETIRE RICH

You are strongly encouraged to consult your financial planner before making any decision regarding this investment. The views expressed here are the author's personal views and should not be interpreted as a recommendation to invest/avoid.

Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH

Do read the book and give your valuable feedback and request you to post positive comments on Amazon. 

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