The share of lower-rated paper in the MF industry’s debt portfolio has jumped from 19% to 23% in the year to February 2016 and is now around `2 lakh crore, data sourced from ICRA shows. (Reuters)
Close to a fourth of debt held by mutual funds now comprises lower-grade paper with aggregate exposure to these having increased over the past year. The share of lower-rated paper in the MF industry’s debt portfolio has jumped from 19% to 23% in the year to February 2016 and is now around `2 lakh crore, data sourced from ICRA shows. In the case of ‘credit opportunities funds’ more than 60% of the corpus is invested in paper rated sub-AAA.
The exposures of a few fund houses — DHFL Pramerica, Franklin Templeton, UTI Mutual Fund and SBI Mutual Fund — at more than 25% remain elevated. For the top 15 asset management companies (AMC) the average allocation to such instruments has moved up from 19% to 26% of the total assets under management (AUM) or from around R10,000 crore to R12,000 crore over the past year. To arrive at the exposure to lower-grade paper, the study excluded top-rated paper — AAA and A1+ — and also sovereign exposure of all the AMCs.
