Altico Capital defaults, what should MF investors do?
DSIJ IntelligenceCategories: MF Unlocked, Mutual Fund
Investors were yet to recover from the mess at IL&FS, Zee Group and DHFL, and now they are preparing to face the brunt of another default coming from Altico Capital. So, what should be MF investors’ stance, let’s find out.
Altico Capital has defaulted on interest payments worth Rs .19.9 crore due to Dubai’s Mashreq Bank. This means if a mutual fund scheme is having an exposure of 5 per cent to Altico Capital, it could witness a fall in its Net Asset Value (NAV) of around 3.75 per cent in one single day. On September 03, 2019, India Ratings and Research had downgraded Altico Capital’s long-term issuer rating from IND A+ to IND AA-.
There are total 15 mutual funds (open ended as well as close ended) that have exposure of Rs. 537.7 crore to Altico Capital. All 15 mutual funds are from UTI AMC (Asset Management Company) and Reliance Nippon AMC. Following are the list of mutual funds having exposure to Altico Capital.
| Fund Name | Fund House | AUM (in Rs. cr) | % of AUM | Market Value (in Rs. cr) | Portfolio as on |
| UTI Credit Risk Fund-Reg | UTI AMC | 3,526.00 | 5.69 | 200.80 | 31-Aug-19 |
| Reliance Ultra Short Duration Fund | Reliance Nippon AMC | 3,258.00 | 4.61 | 150.20 | 31-Aug-19 |
| UTI FTIF-XXIX-IX (1109D) | UTI AMC | 270.40 | 11.42 | 30.90 | 31-Aug-19 |
| UTI FTIF-XXVII-II (1161D) | UTI AMC | 333.00 | 8.44 | 28.10 | 31-Aug-19 |
| UTI FTIF-XXX-III (1106D) | UTI AMC | 221.00 | 10.31 | 22.80 | 31-Aug-19 |
| UTI FTIF-XXX-I (1104D) | UTI AMC | 206.10 | 10.28 | 21.20 | 31-Aug-19 |
| UTI FTIF-XXIX-XIII (1122D) | UTI AMC | 204.20 | 10.26 | 20.90 | 31-Aug-19 |
| Reliance FHF-XXXX-3 (1265D) | Reliance Nippon AMC | 123.80 | 9.94 | 12.30 | 31-Aug-19 |
| Reliance FHF-XXXVIII-2 (1412D) | Reliance Nippon AMC | 180.10 | 6.31 | 11.40 | 31-Aug-19 |
| Reliance FHF-XXXIX-5 (1342D) | Reliance Nippon AMC | 111.50 | 9.60 | 10.70 | 31-Aug-19 |
| UTI FTIF-XXX-VI (1107D) | UTI AMC | 92.80 | 9.91 | 9.20 | 31-Aug-19 |
| Reliance FHF-XXXVII-9 (1443D) | Reliance Nippon AMC | 129.20 | 6.92 | 8.90 | 31-Aug-19 |
| Reliance FHF-XXXX-8 (1236D) | Reliance Nippon AMC | 78.60 | 6.80 | 5.30 | 31-Aug-19 |
| Reliance FHF-XXXIX-11 (1313D) | Reliance Nippon AMC | 45.00 | 8.96 | 4.00 | 31-Aug-19 |
| Reliance FHF-XXXVIII-10 (1385D) | Reliance Nippon AMC | 80.00 | 1.19 | 1.00 | 31-Aug-19 |
If we look at the above table, then we can see that in terms of value, UTI AMC has the highest exposure of Rs. 333.90 crores, whereas Reliance AMC has an exposure of Rs. 203.80 crores. If we look at it from the funds type perspective, then, open ended funds had the highest exposure of Rs. 351 crores and close ended funds have the exposure of Rs. 186.70 crores.
More than the fund value, the per cent of AUM would have more impact on a particular fund. So, in that sense, UTI FTIF-XXIX-IX (1109D), UTI FTIF-XXX-III (1106D), UTI FTIF-XXX-I (1104D) and UTI FTIF-XXIX-XIII (1122D) are the top funds that have exposure of more than 10 per cent to Altico Capital. Even the UTI Credit Risk Fund and Reliance Ultra Short Duration Fund have exposure of 5.69 per cent and 4.61 per cent respectively. So, those who are holding these funds should switch to other funds as Altico Capital is likely to default on its next interest payment as well.