As many as 36 mutual fund schemes in the MF industry have more than 10% exposure to perpetual bonds. These schemes include categories like banking and PSU funds, credit risk funds, medium duration funds, medium to long duration funds, dynamic bond funds and aggressive hybrid fund among others, finds a study done by Crisil.
Overall, these 36 schemes are spread across 13 fund houses.
On March 10, SEBI has put a 10% cap on exposure to bonds having special features like perpetual bonds, Tier I and Tier 2 bonds.
The study finds that banking and PSU sector PSU funds category has the highest number of schemes (7) exceeding the 10% cap in such securities. It is followed by the credit risk funds (5), medium duration funds (4), medium to long duration funds (4) and hybrid aggressive funds (3).
Piyush Gupta, Director, Crisil Funds Research said “The regulator’s move to ‘grandfather’ limits previously held is a positive move. In the medium to long term, with the restrictions in place, it could reduce appetite among MFs for the securities, thus limiting the risk for investors. This is also prudent given the advent of hordes of individual investors into debt funds. They may not have ability to understand MF portfolios and gauge risk, especially, in such type of bonds – we saw how they were caught unaware by the recent write offs.”
