SEBI has issued a circular in which it has allowed fund houses to increase exposure in housing finance companies (HFCs) from 5% to 10% of the net assets of the scheme. The circular is applicable with immediate effect.
“Presently, the guidelines for sectoral exposure in debt oriented mutual fund schemes put a limit of 25% at the sector level and an additional exposure not exceeding 5% (over and above the limit of 25%) in financial services sector only to HFCs. In light of the role of HFCs especially in affordable housing space, it has now been decided to increase additional exposure limits provided for HFCs in financial services sector from 5% to 10%,” states SEBI circular.
SEBI has clarified that such securities have to be rated AA and above and these issuer HFCs are registered with National Housing Bank (NHB). However, the total investment in HFCs cannot exceed 25% of the net assets of the scheme.
Dwijendra Srivastava, CIO - Debt, Sundaram MF believes that the move will benefits investors. “There are some good companies in the HFC space. An additional exposure of 5% will help fund managers increase exposure in these companies which will eventually help investors.”
“Considering the important role played by Housing Finance Companies (HFCs) in fulfilling the social objective of increased home ownership and supporting the economy by creating demand for construction of new homes, SEBI has increased the exposure limit in housing finance company,” said a senior official from a private sector fund house.
After the Amtek auto incident, SEBI had reduced exposure limit to financial services sector to 25% of NAV from 30%. The exposure limit to Housing Finance Companies (HFCs) was brought down to 5% of NAV from 10% of NAV.
