Reliance Mutual Fund held Rs 2,294 crore in Yes Bank bonds


Reliance Mutual Fund held Rs 2,294 crore worth of bonds in the recently downgraded papers of Yes Bank Limited (YBL) and Yes Capital India Pvt. Ltd, shows data from Morningstar India. ICRA, a rating agency, downgraded these papers on May 03. Seven mutual fund schemes from the AMC have an exposure to the bonds of the Yes Bank.

Franklin Templeton AMC, the second in line after Reliance Nippon Life AMC, with Rs 1,083 crore invested in the YBL’s and Yes Capital’s debt securities.

Mutual fund analysts say the kind of risks we are seeing now – that is, credit risk – is obviously there in fixed income investments. They say the risk is higher as we go down the credit ladder or, in other words, investments in lower-rated bonds.

“What we are seeing in the fixed income market currently is one of the risks that tags along with fixed income funds. SEBI in its fund re-classification guidelines have made a separate category for funds which take credit risk, but then there are funds in other categories as well which takes credit exposure. The chances of such funds witnessing downgrades in some of their lower rated holdings is typically higher,” says Himanshu Srivastava, Senior Analyst, Manager Research, Morningstar.

Here is the list of AMCs with their exposure to the troubled Yes Bank’s debt papers.

AMC Name
Market Value (Rs crore)
Reliance 2,294
Franklin 1,083
UTI 470
Kotak 124
Baroda 69
DHFL 66
Sundaram 15
Aditya Birla 11
IDBI 9
L&T 5
Mahindra 5

Data as on March 31, 2019
Source: Morningstar India

The table below shows the schemes of Reliance Mutual Fund and Franklin Templeton Mutual Fund with their exposure to the Yes Bank’s corporate bonds.

Fund name
Bond % of Portfolio Market Value (Rs crore) No of Bonds
Reliance Arbitrage Fund 9.5% Yes Bank Limited 1.09 89 937
Reliance Arbitrage Fund 9% Yes Bank Limited 0.22 18 200
Reliance Balanced Advantage Fund 9.5% Yes Bank Limited 2.86 47 500
Reliance Credit Risk Fund 9.5% Yes Bank Limited 0.89 85 898
Reliance Credit Risk Fund 9% Yes Bank Limited 6.23 598 6,500
Reliance Equity Hybrid Fund 9% Yes Bank Limited 5.71 732 7,953
Reliance Equity Savings Fund 9% Yes Bank Limited 4.06 77 839
Reliance Hybrid Bond Fund 9% Yes Bank Limited 2.25 45 493
Reliance Strategic Debt Fund 9.5% Yes Bank Limited 1.33 78 820
Reliance Strategic Debt Fund 9% Yes Bank Limited 8.93 524 5,700
Franklin India Credit Risk Fund 9.50% Yes Bank Ltd. (23-Dec-2021) 2.20 161 1,695
Franklin India Debt Hybrid Fund 10.25% Yes Bank Ltd. (05-Mar-2020) 1.48 5 50
Franklin India Dynamic Accrual Fund 9.50% Yes Bank Ltd. (23-12-2021) 1.67 65 682
Franklin India Short Term Income Plan 9.50% Yes Bank Ltd. (23-Dec-2021) 2.60 335 3,523
Franklin India Low Duration 0.00% Yes Capital India Pvt. Ltd. (12-Oct-2020) 2.43 168 1,463
Franklin India Ultra Short Bond Fund 0.00% Yes Capital India Pvt. Ltd. (12-Oct-2020) 2.08 349 3,037

Data as on March 31, 2019
Source: Morningstar India

Srivastava of Morningstar says that a downgrade does not mean that investors will lose their money. “It should also be well understood that a downgrade is different from a default.” “But given in the recent times we have seen downgrades leading to defaults, it doesn’t harm to be cautious, nonetheless. This means that it also requires investors to be more prudent than historically they would have been while investing in debt funds,” he adds.





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