What if MF house shuts down!

Lately I got here throughout:Navi MidCap 150 Index Fund

Expense Ratio: 0.1% (Different’s is 0.3%)
AUM: 138Cr
Age: 2yrs
Monitoring error is just not a lot as in comparison with Excessive AUM index funds (round 1500Cr).

Due to this fact general it appears to be like advantageous…

So my query is what’s going to occur if NAVI will get shut down?What are further dangers if we go along with NAVI?

PS: Zerodha AMC is even youthful.

Thanks very a lot Neha.

Is there an opportunity of my funding getting caught for years if mutual fund home does one thing fishy?Due to this fact ought to I divide my investments throughout a number of mutual funds of identical sort? For instance 4 NIFTY index funds as an alternative of 1 NIFTY index fund?

Within the article you shared, it’s written than the mutual funds will get transferred to a unique fund home or the cash is given again to traders. However how a lot time these processes take? Usually in India issues take years to maneuver. So is there an opportunity my funding will get caught for years?

I might not fear an excessive amount of if the AMC is well-known. I’ve personally opted for SBI as an AMC for my funding in Nifty 50 ETF and Nifty subsequent 50 ETF. The exception is motilal nasdaq 100 ETF. It is because SBi or UTI don’t have such ETF.

As you have an interest in Nifty 50 Index fund which is passive in nature, why would you go for lesser identified AMC when you’ve gotten SBI or UTI issuing the identical Index funds.

Identical guidelines apply for Time period Insurance coverage as properly. It can at all times be LIC for me.

Is there an opportunity of my funding getting caught for years if mutual fund home does one thing fishy?

Likelihood is at all times there. Very minute likelihood, however threat is at all times there

One thing like that occurred throughout COVID the place 6 debt funds of franklin Tempelton had been closed for redemption as they had been unable to liquidate the bonds they had been holding.Lastly that cash was paid again over a few years, however I feel no less than for a 12 months or two traders couldn’t entry their cash.

So there’s a small likelihood. I really feel for largecap funds (nifty 50, subsequent 50) threat could be very low and will be ignored, however as you progress away from massive caps, it’s worthwhile to account for such dangers.

So it’s higher to have no less than 3-4 mutual funds of the identical class to organize for such a threat.

Complexity to Keep away from Danger of entire capital getting locked for years.4 MFs for Nifty (excessive allocation)3 MFs for Next502 MFs for Mid150 (low allocation)4 MFs for debt

The largest downside in India is that the govt.. is mostly very very sluggish in offering options. And the frequent man is left hoping for a fast answer. That’s why I concern. @Akash_Shah you gave a very good instance.