Aditya Birla Sun Life Mutual Fund Stops Fresh Investment In Two Schemes
An employee counts Indian rupee banknotes at a Walmart Inc. Best Price Modern Wholesale store in Hyderabad, India, on Saturday. (Photographer: Dhiraj Singh/Bloomberg)

Aditya Birla Sun Life Mutual Fund Stops Fresh Investment In Two Schemes

Aditya Birla Sun Life Mutual Fund stopped fresh investments into its credit risk fund and medium-term plan.

From May 22, there will be no fresh registrations under either the systematic investment or transfer route, according to a notification from Aditya Birla Sun Life Trustee Pvt. Ltd. The SIPs or STPs registered prior to the effective date, however, will be processed.

The decision to stop fresh investments into the two funds is a measure to protect existing investors in the two schemes as the fund house expects a change in the classification of some of the debt instruments it had written down, A Balasubramanian, managing director and chief executive officer at Aditya Birla Sun Life Mutual Fund, told BloombergQuint over the phone.

A positive change in the classification of the debt marked down earlier would result in an upward revision in the net asset value of the schemes, Balasubramanian said. New investors would gain an undue advantage over investors that had stayed invested despite the write-down, he said.

Also read: Franklin Templeton’s Wind-Down Triggers Biggest Monthly Outflow From Credit Risk Schemes

Balasubramanian did not divulge details of which debt would be reclassified and what its impact will be on the NAVs.

“On the face of it, it’s positive for existing investors. But it would be beneficial if the fund house releases more information on which papers are likely to see a reclassification, and the extent of the positive impact on the NAV,” said Harshvardhan Roongta, certified financial planner and founder of Roongta Securities. “Ideally, there should be an official statement in this regard.”

Like several other fixed income mutual fund schemes, both the credit risk fund and medium term plan of Aditya Birla Sun Life saw redemptions after the closure of six funds by Franklin Templeton towards the end of last month.

According to data available with the Association of Mutual Funds in India, the assets under management of Aditya Birla Sun Life’s credit risk fund fell over 49 percent to Rs 2,016.24 crore between April 24 and May 20. For the medium term plan, they declined 52 percent to Rs 2,144.87 crore.

Also read: Franklin India May Take Over Five Years to Return Some Funds

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.