The ITC Mutual Fund is merging with Zurich Mutual Fund. This is the
fallout of the purchase of the financial services division of BAT (ITC's parent) by Zurich Insurance.

ITC-Threadneedle is currently managing two schemes while the Zurich Mutual Fund has four schemes under management. The merger would however require the approval of a minimum of 75% of the unit holders. Post merger, the new mutual fund would have Rs 3.5 bn under management.

The Indian Mutual Fund industry has grown by leaps and bounds since the late 1980s, when for the fist time Indian public sector banks were allowed to set up asset management companies. Subsequently, the private sector too was given permission to launch mutual funds. The mutual fund industry has grown at a brisk pace since then. However, a part of the industry, in particular the private segment, have been plagued with low mobilizations per scheme. This results in diseconomies and subsequently takes its toll on the performance on the scheme.

The merged fund would lead to lower operating costs, which could translate into higher returns for the investor.

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