I’ve a doubt from long time looks silly but if any one can help me in
this would be great, so here is my question " i’m doing SIP from last year in Small cap fund of Axis mutual fund for long term like 25years, if fund house or Axis AMC go bankrupt like after 5 or 10 years what will happened to my SIP mutual fund, can i able to sell them or i’ve to lost,
b’coz last Franklin had done this, still some of them struggling with this,
pls any one can reply.
Hmm… to avoid such risks you can spread it by investing through different AMCs.
But don’t worry, such things are not really possible. They are well regulated as well.
You will not loose your money even if the AMC shous down.
There is difference between AMC going bankrupt and what happened in Franklin debt fund crisis.
In Franklin’s case they made bad investment bets in few of their debt funds (illiquid, low rated debt, for lot of debt issuer they were the only lender and so on). So when market crashed there was heavy redemption which they could not have sustained without value destruction. So 6 funds were frozen and lot of people’s money got stuck.
This was specific to 6 funds only and AMC did not go bankrupt, other funds of same AMC continued functioning normally.
This was more of fund management risk then AMC going bankrupt, and is possible in all funds.
Only way to prevent this is periodically reviewing funds portfolio regularly for such bad apples, and to some extent by diversification.
Coming to AMC going bankrupt, as such AMCs are tightly regulated entities by SEBI. In an unlikely event of AMC goes bust, most likley its funds will be taken over by some other AMC or a new entrant, so chances of losses to investor are really low.
For eg. when reliance capital was in bad shape, it was taken over by Nippon and all reliance MF were rebranded