iStockAditya Birla Sun Life Mutual Fund will stop accepting fresh money in two of its debt schemes — Medium Term Fund and Credit Risk Fund — temporarily from May 22. The fund house said the move is aimed at benefiting the existing investors in the two schemes.
“We believe there are substantial gains in our funds which would be realised by the existing investors over the next few months,” said A Balasubramanian, CEO, Aditya Birla Sun Life MF. “Since we do not wish to dilute this for existing investors by taking more money in these funds, we have stopped fresh subscriptions in these funds.”
Aditya Birla Sun Life Medium Term Fund manages assets worth Rs 2,401 crore and Aditya Birla Sun Life Credit Risk Fund manages Rs 2,576 crore as of April 30, 2020. Investors can, however, redeem money.
Ever since the IL&FS crisis broke out, several debt mutual fund schemes have marked down various assets in their portfolio on account of credit rating downgrades or defaults by companies. Once the money is recovered, there is scope for some of these losses being reversed.
“After the lockdown is lifted, the fund house could recover money from marked-down assets and they want existing investors to get it more than new investors,” said the product head at a domestic wealth management firm.
Analysts said projects like Jharkhand Road Projects — an IL&FS special purpose vehicle — in which Aditya Birla Medium Term Fund holds an 8.9% stake as on April 30, 2020, is an example. The Jharkhand project, which is rated C by credit rating agencies, is an annuity project for which the state government provides budgetary support and annuities are received in a timely manner.
“We believe there are substantial gains in our funds which would be realised by the existing investors over the next few months,” said A Balasubramanian, CEO, Aditya Birla Sun Life MF. “Since we do not wish to dilute this for existing investors by taking more money in these funds, we have stopped fresh subscriptions in these funds.”
Aditya Birla Sun Life Medium Term Fund manages assets worth Rs 2,401 crore and Aditya Birla Sun Life Credit Risk Fund manages Rs 2,576 crore as of April 30, 2020. Investors can, however, redeem money.
Ever since the IL&FS crisis broke out, several debt mutual fund schemes have marked down various assets in their portfolio on account of credit rating downgrades or defaults by companies. Once the money is recovered, there is scope for some of these losses being reversed.
“After the lockdown is lifted, the fund house could recover money from marked-down assets and they want existing investors to get it more than new investors,” said the product head at a domestic wealth management firm.
Analysts said projects like Jharkhand Road Projects — an IL&FS special purpose vehicle — in which Aditya Birla Medium Term Fund holds an 8.9% stake as on April 30, 2020, is an example. The Jharkhand project, which is rated C by credit rating agencies, is an annuity project for which the state government provides budgetary support and annuities are received in a timely manner.
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