Fall­out from Amtek Auto and JSPL is­sues dents sen­ti­ment; to­tal AUM shrinks more than 9% in just 7 months

The Economic Times - - Companies: Pursuit Of Profit -

Mum­bai: In­vestors have moved away from credit funds in the past few months af­ter the fears sur­round­ing Amtek and Jin­dal Steel and Power (JSPL) is­sues cre­ated panic in the mar­ket.

THE SIL­VER LIN­INGS

In­formed­in­vestors,who­ca­nun­der­stand and an­a­lyse the risk, will now come back.”

Amtek de­fault fears started spook­ing in­vestors since Au­gust, but the com­pany later re­paid part of its dues, even though there was a de­lay. Jin­dal Steel and Power have fully re­paid their in­vestors. Some mu­tual fund in­vestors in those pa­pers haveal­ready­in­curred­loss­esas­they rushed to exit their in­vest­ments.

In the past one year, credit funds have re­turned 8.91% on an av­er­age, while the sen­si­tive in­dex Sen­sex lost 6.5% dur­ing the same pe­riod. The av­er­age yearly re­turns were at 9.21% in the past three years, ac­cord­ing to Morn­ingstar.

“Withyields­dip­ping,thisseg­ment (credit funds) is likely to of­fer at­trac­tive in­vest­ment op­por­tu­ni­ties in the next cou­ple of years,” said Lak­shmi Iyer, chief in­vest­ment of­fi­cer (debt), Ko­tak Mu­tual Fund. “But, you need to be aware of the risk el­e­ments. Cur­rently, such port­fo­lios are hav­ing gross yields of around 2% — higher than any gilt or other bond funds.”

F r a nkl i n I ndi a , Rel i a nc e, ICICI Pru­den­tial, Ko­tak Birla, L&T, DSP Black­Rock are some of the fund houses that run those credit schemes. Two fund schemes, DHFL Pramer­ica Credit Op­por­tu­nity and Bar­o­daPioneerCred­itOp­por­tu­nity, have de­liv­ered the best re­turns, ac­cord­ing to Morn­ingstar data. They yielded 10.38% and 10.11% (an­nu­alised as on April 190) re­spec­tively.

“Not­with­stand­ing the re­cent con­cerns on credit en­vi­ron­ment, we will see flows com­ing back into credit funds,” said Amit Tri­pathi, head of fixed in­come at Re­liance Mu­tual Fund.

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