Aditya Birla Sun Life Mutual Fund has decided to stop fresh subscriptions in its credit risk fund and medium term fund from Friday, May 22 2020.
With this, the fund house will not allow any fresh registrations under systematic investments such as SIPs, STPs and Century SIPs in ABSL Medium Term Plan and ABSL Credit Risk Fund. "All other features and terms & conditions will remain unchanged," the fund house said in a notice.
This means SIPs, STPs and CSIPs registered before May 22 will continue to be processed. And existing investors can redeem their investment at any point.
Why stop fresh subscriptions?
A company spokesperson said that these schemes were exposed to IL&FS group papers. And the fund house had marked down them in the past.
As a result, ABSL Credit Risk Fund's one-year return has reduced to only 0.6% and ABSL Medium Term Plan's one-year return is -8.5%.
Now that these schemes are set for some recovery on those debt papers, the fund house does not want speculators to take advantage of it.
"We believe that there are substantial gains in our funds which would be realised by the existing investors over next few months. 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," the spokesperson said.
