Debt Schemes exceeds SEBI’s new cap rules in February

Debt Schemes exceeds Sebi's new cap rules in February

Debt Schemes exceeds SEBI’s new cap rules in February

In the last month, up to 36 debt schemes of 13 mutual fund houses stood above SEBI’s new cap on MF holdings in AT1 and AT2 bonds. According to the market analysis, the overall Mutual Fund portfolios of AUM were not in violation of the 10% outset in such bonds.

The market experts found that seven banking and public sector undertaking funds led the pack which exceeded the 10% cap in such bonds, followed by 5 credit risk funds, 4 medium duration funds, 4 medium to long-duration funds, and 3 dynamic bond funds.

“The controller’s transition as far as possible recently held a positive move. In the medium to the long haul, with the limitations set up, it could diminish craving among Mutual Funds for the protections, hence restricting the danger for financial advisors. This means additionally judicious given the coming of swarms of individual investors into obligation reserves. They might not comprehend MF portfolios and check the dangers, particularly in such sort of securities, we perceived how they were gotten unprepared by the new discounts,” said a source.

According to the SEBI circular, on March 10th, the market regulator has capped investments by MF houses under all its schemes in bonds with special features to not more than 10% from one issuer. SEBI also specified that no MF scheme can hold more than 10% of its net asset value of the debt portfolio in such bonds. Moreover, not more than 5% of the NAV of the debt portfolio should be due to such bonds from one issuer.

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