ICICI Prudential MF announces grandfathering of two funds: What this means for investors

ICICI Prudential Mutual Fund has grandfathered two of its Fund-of-Fund (FoF) schemes—the Passive Multi-Asset Fund of Fund and the Global Advantage Fund of Fund—effective January 27. This move stops fresh investments while allowing existing investors to remain in the schemes.

What is happening?

The fund house has halted all new lump-sum subscriptions, new SIPs, STPs, and switch-ins in the two schemes.

Transactions submitted on or before 3:00 pm on January 23 will be processed at the applicable NAV.

Existing investors can continue to redeem or switch out units without restrictions.

Why is this happening?

The Securities and Exchange Board of India (SEBI) recently updated regulations for Fund-of-Fund schemes. Under the new framework:

• Schemes must meet specific criteria to accept new investments.
• The two ICICI Prudential FoFs do not fit into any of the new categories.

Grandfathering ensures that the schemes remain available for current investors but cannot take in new money.

What does ‘grandfathering’ mean?

Grandfathering allows a fund to continue its operations for existing investors even if it no longer complies with new regulations.

Fresh investments are barred, but current investors can stay invested, redeem, or switch funds at any time.

Typically, the schemes are wound up or merged within a few years after grandfathering.

What investors should know

Investors in these schemes should:

• Monitor redemption or switch timelines if they wish to exit.
• Stay informed about future merger or winding-up plans from the fund house.

Grandfathering protects existing investors while ensuring compliance with SEBI’s updated rules.