In a bit to make the debt fund category safer, SEBI has redefined corporate bond fund, credit risk fund and banking & PSU funds. In these three debt fund categories, fund managers can now increase their exposure to safer debt securities like g-secs and treasury bills.
SEBI has asked fund houses to reduce their exposure to AA+ securities by 15% of fund’s assets and deploy this corpus in g-secs and treasury bills.
With this, corporate bond funds will have to reduce their exposure to AA+ and above rated instruments from 80% to 65%. Similarly in credit risk funds, the minimum investment in AA and below rated corporate bonds has been reduced to 50% from 65%.
In banking & PSU funds, the minimum investment in debt instruments of banks, public sector undertakings, public financial institutions and municipal bonds has been revised to 65% from 80%.
Table
|
Category |
Revised scheme characteristics |
Earlier scheme characteristics |
|
Corporate bond fund |
Min 65% of total AUM to be invested in AA+ above rated corporate bonds |
Min 80% of total AUM to be invested in AA+ above rated corporate bonds |
|
Credit risk fund |
Min 50% of total AUM to be invested in AA and below rated corporate bonds |
Min 65% of total AUM to be invested in AA and below rated corporate bonds |
|
Banking & PSU fund |
Min 65% of total AUM in debt instruments of banks, public sector undertakings, public financial institutions and municipal bonds |
Min 80% of total AUM in debt instruments of banks, public sector undertakings, public financial institutions and municipal bonds |
SEBI said that the changed characteristics of these three debt funds are valid till August 18.
SEBI has changed the characteristics of these three debt funds after industry body AMFI wrote to the market regulator. Fund houses sought permission to increase exposure in G-sec and T-bills, as corporate bonds have turned out to be less liquid and riskier due to the covid-19 outbreak.
As on April 30, AUM of corporate bond funds stood around Rs 86,290 crore, AUM of credit risk funds at Rs 35,220 crore and AUM of banking & PSU funds at Rs 79,240 crore.
