Aditya Birla Sun Life Trustee, trustees to Aditya Birla Sun Life MF, has decided to extend the maturity of seven Fixed Term Plans, reasoning that maturity reset is the best solution for low yields at offer to investors. This means once the maturity is extended, money in these schemes will be locked up for another 550-780 days.
The 7 Fixed Term Plans are Aditya Birla Sun Life Fixed Term Plan – Series OZ (1187 days), Aditya Birla Sun Life Fixed Term Plan – Series PA (1177 days), Aditya Birla Sun Life Fixed Term Plan – Series PC (1169 days), Aditya Birla Sun Life Fixed Term Plan – Series PF (1148 days), Aditya Birla Sun Life Fixed Term Plan – Series PK (1132 days), Aditya Birla Sun Life Fixed Term Plan – Series PI (1140 days) and Aditya Birla Sun Life Fixed Term Plan – Series PJ (1135 days). These schemes were originally set to mature between April 5 to April 20 this year. They will now mature between October 2022 to June 2023.
“Owing to low yields at offer to investors, it will be prudent for existing investors to make maximum use of the indexation benefit and opt for extending their investments in the above mentioned Fixed Term Plans. Further, the massive bond rally in the previous year fueled by aggressive rate cuts and accommodative stance of the RBI has pushed rates lower. Therefore, re-setting of maturities will offer an opportunity for investors of the respective Scheme(s) to get an extended Long Term Capital Gain benefit for their current
investments,” Aditya Birla Sun Life MF said.
A detailed letter intimating the terms and features of the proposed extension along with proforma consent for re-setting the maturity will be dispatched/emailed to the registered address/email ID of the Unitholder(s)/Beneficial Owner(s) whose names appear in the records of the Registrar and Transfer Agent (CAMS).
Unitholder(s) who do not submit the duly filled consent form within the original maturity date of their respective scheme will not be entitled for extension of maturity and their investments in the schemes shall be redeemed on the â€œOriginal Maturity Dateâ€. Such Unitholders shall receive the redemption/maturity proceeds based on the applicable Net Asset Value as on the Original Maturity Date of the respective schemes.
Do note that the roll-over of the schemes will be subject to compliance with SEBI guidelines with respect to:
1. Maintaining the assets under management of at least Rs 20 crore; and
2. Requirement of minimum of 20 investors and no single investor shall account for more than 25% of the corpus of the sheme.
In case the above conditions are not fulfilled, the schemes will not be rolled over and the maturity proceeds will be paid out to the Unitholders.
What to do
A maturity reset does not guarantee results. Locking up money for another 550-780 days cannot be an option for all investors, especially if there are potential withdrawals linked to financial goals. Do note if the interest rates fall from here, there can be significant capital losses. Bond prices and interest rates are inversely proportional. High-duration funds are more sensitive to interest rate movements. Hence, investors should weigh their time horizon and risk appetite before accepting maturity extension of any fixed term plan.