Corporate credit funds, once considered safer substitutes to high-yielding bonds, fared their worst in about four years as volatility in NBFC debt and misaligned maturity profiles whittled down returns by 200-300 basis points. In the past one year, credit funds have yielded 5.22% compared with 8.50-9.50% in normal circumstances, showed data from Value Research, an online mutual fund portal. "Wherever fund houses have taken a hit by selling NBFC papers in losses, their average returns have come down significantly," said Dhirendra Kumar, founder and CEO of Value Research. "Investors may continue to shy away from credit funds unless confidence is regained in NBFC debt securities." DSP Mutual Fund sold bonds of DHFL at a higher yield, triggering speculation that there could be ratings downgrades in the housing finance company. In the secondary market, DSP sold DHFL securities worth Rs 300 crore at yields of 11%, about 200 basis points higher than normal rates. Top performing funds, … [Read more...] about Are days of high credit fund returns over?
Sovereign wealth fund
BMA’s clients allege that depository firm CDSL and stock exchanges did not act on their complaints, prompting them to protest before Sebi. They say their shares have been transferred to a pool account without their knowledge and have been used to avail loans. Illustration: Uttam Ghosh/Rediff.com With market regulator Securities and Exchange Board of India (Sebi) trying hard to resolve the Karvy fiasco, yet another hot potato has landed squarely in its lap. Clients of BMA Wealth on Monday staged protest outside Sebi headquarters at Bandra Kurla Complex (BKC) in Mumbai, demanding their securities and funds be restored.Interestingly, Sebi had issued an order against BMA Wealth in October, a month before Karvy in a similar case of fraudulently transferring and pledging of client securities. BMA’s clients allege that depository firm CDSL and stock exchanges did not act on their complaints, prompting them to protest before Sebi. They say their shares have been transferred to a … [Read more...] about Sebi has its hands full, as BMA Wealth investors demand Karvy-like refund action
MUMBAI: The diversified Centrum Group, which is into wealth management, equity broking and credit business with focus on SME financing and housing, is planning to launch a structured credit fund with an initial corpus of Rs 500 crore shortly. The Jaspal Bindra-run group offers integrated financial solutions under various verticals like the flagship Centrum Capital with its various subsidiaries like wealth management, broking, housing finance, financial advisory, and infrastructure & reality advisory and is present pan-India with 80 branches. The privately held group also has plans to enter the now lucrative ARC (asset reconstruction company) space given the trillions of rupees of assets up for grabs at the various bankruptcy courts. But the immediate focus is launching a structured credit fund. We plan to launch it with an initial corpus of at least Rs 500 crore and it should be up and running soon after the general elections, chairman Bindra, who owns around one-quarter of … [Read more...] about Centrum to launch Rs 500 crore structured credit fund
By Sachin Jain In our quest to make better returns, we often get this thought: I wish I had the advantage of hindsight. Looking back at the last decade, an investor would wish he/she was in cash in 2008, remained fully invested in equities – preferable largecaps – in 2009, moved out to real estate in 2013, shifted to midcaps/smallcaps during 2014-2017 and moved out to gilt funds in 2019. If one would have done all of that, then the kind of returns accrued would have been phenomenal. However, mutual fund industry figures reflect a completely opposite trend. Why is it so? One of the key factors is the over-emphasis on past performance and our inability to book profit in a trending market. The learning is that it is difficult to invest in an asset class when it is out of favour. As investors, we tend to succumb to herd mentality. For example: There was increased allocation to bond (duration) funds in early 2013 before RBI Governor Raghuram Rajan spoiled the party. When it … [Read more...] about A wealth-creation idea whose time has come: credit risk fund
Many investors, especially the new ones, are picking large & mid cap mutual fund schemes for their potential to offer superior returns. Popular schemes like Mirae Asset Emerging Bluechip Fund is helping the category immensely. However, investors should first try to understand the category better. What is a large & mid cap mutual fund scheme?According to Sebi mandate, large & mid cap schemes are mandate to invest in at least 35% of the corpus in large cap mutual stocks and 35% in mid cap stocks. Large cap stocks are defined as top 100 stocks by market capitalisation, while mid cap stocks are defined as 101-250 stocks by market capitalisation. Why are these schemes a bit tricky to understand?Many investors choose these schemes for some mid cap exposure. But many of them are unaware that the scheme is mandated to invest a minimum 35% of the corpus in mid cap stocks. Mid cap stocks are risky and they can also be volatile. You should take an exposure to them only if you have a … [Read more...] about 5 things to know before investing in large & mid cap mutual funds