MF investors take a hit from bank fiasco

The Yes Bank fiasco has hit mutual fund investors in debt and equity hard as the stock fell over 55 per cent following the RBI imposing a monthlong moratorium on the troubled bank.

The total mutual fund exposure in Yes Bank equity and debt stands at Rs 3,345 crore, of which Rs 2,819 crore is in debt papers.

As on January 31, 2020, as many as 32 schemes across 11 asset management companies (AMCs) had exposure in Yes Bank’s debt. The AMCs include Aditya Birla Sun Life, Franklin Templeton, Kotak MF, Nippon India, Sundaram MF and UTI MF.

In value terms, Nippon India Mutual Fund schemes have the highest Yes Bank debt exposure at Rs 1,806.2 crore. Nippon India said it has marked down the value of its investments to zero in bonds issued by Yes Bank. The fund house has imposed a limit of Rs 2 lakh on fresh inflows into the impacted schemes.

In terms of percentage of assets under management (AUM), Nippon India Strategic Debt has the highest exposure of 21.25 per cent, followed by Nippon India Credit Risk (10.96 per cent), Nippon India Equity Hybrid (8.11 per cent), Nippon India Hybrid Bond (8.06 per cent). In total, six schemes of Nippon India had Yes Bank debt exposure.

Franklin Templeton is next in line with Rs 475 crore exposure--as per market value. It has exposure across four schemes ranging from 1.4-2.7 per cent of AUM.

UTI MF has the third largest exposure, in over six schemes. UTI Credit Risk is the maximum exposed, as percentage of AUM, at 6.38 per cent.

Kotak Mahindra Mutual Fund (Rs 93.8 crore), Baroda Mutual Fund (Rs 53.6 crore), PGIM India Mutual Fund (Rs 21.9 crore), Aditya Birla Sun Life Mutual Fund (Rs 9 crore), Sundaram Mutual Fund (Rs 8.1 crore), IDBI Mutual Fund (Rs 7.2 crore), L&T Mutual Fund (Rs 5 crore) and Mahindra Mutual Fund (Rs 1.6 crore) have moderate to minimal exposure in value terms.

On the equity side, exposure to Yes Bank is mostly in index funds because it is a part of the Nifty 50 Index--it is scheduled to exit the Nifty on March 27. The largest exposure as a percentage of assets is in DSP Equal Weighted Nifty 50 Fund at 1.60 per cent of assets.

Since it is also part of banking ETFs, the stock is present in a number of banking ETFs which track such indices such as ICICI Pru Private Banks ETF (1.33 per cent of assets) and Tata Nifty Private Bank ETF (1.3 per cent of assets).

Several mutual funds have also stopped accepting redemption requests from their schemes into Yes Bank accounts to protect investors. They have asked clients who have accounts with Yes Bank to furnish details of alternate accounts for receiving redemption payouts.

In case of AT1 bonds, the debt-holders are treated like equity-holders in such events. Hence repayment is not likely for these types of bonds.