DHFL delays interest payments on bonds, debt mutual funds fall over 50% in a single day

Personal finance
1

The last one has just been crazy for debt as a whole. From defaults to liquid funds losing 1-year returns in a single day, it’s been action packed. Just when you thought things couldn’t get any worse, they did.

Here’s what happened: DHFL was supposed to make interest payments of Rs 960 crore but missed it. As a result, several mutual funds were hit hard, chief among them funds from DHFL. According to this article, 164 funds across 24 AMCs have an exposure of Rs 5336 crores to DHFL.

Here are the top losers

Name 1 Day change %
DHFL Pramerica Medium Term Fund Direct Plan Growth -52.98
DHFL Pramerica Floating Rate Fund Direct Plan Growth -48.39
Tata Corporate Bond Fund Direct Plan Growth -29.68
Baroda Treasury Advantage Fund - Plan B (Direct) - Growth Option -17.15
DHFL Pramerica Low Duration Fund Direct Plan Growth -16.57
DHFL Pramerica Short Maturity Fund Direct Plan Growth -13.55
BNP Paribas Medium Term Fund Direct Growth -12.88
Tata Medium Term Fund Direct Plan Growth -12.3
JM Equity Hybrid Fund (Direct) - Growth Option -11.64
BNP Paribas Corporate Bond Fund Direct Plan Growth Option -10.83
JM Low Duration Fund (Direct) - Growth Option -10.2
JM Income Fund (Direct) - Growth Option -9.63
UTI Short Term Income Fund -Institutional Growth Option- Direct -9.43
UTI Treasury Advantage Fund - Institutional Plan - Growth- Direct -8.77
Baroda Dynamic Bond Fund - Plan B (Direct) - Growth Option -8.37
Sundaram Short Term Debt Fund - Direct Plan - Growth Option -8.12
Sundaram Short Term Credit Risk Fund - Direct Plan - Growth Option -7.14
IDBI Credit Risk Fund Direct Growth -7.13
IDBI Ultra Short Term Fund Direct Growth -7.06
LIC MF Savings Fund - Direct Plan Growth Option -6.09
BNP Paribas Low Duration Fund Direct Plan Growth Option -5.9
Sundaram Debt Oriented Hybrid Fund - Direct Plan - Growth Option -5.84
Union Corporate Bond Fund Direct Growth -5.63
Sundaram Low Duration - Direct Plan - Growth Option -5.48
JM Short Term Fund (Direct) - Growth Option -5.46
Axis Regular Saver Fund Direct Plan Growth Option -5.42
JM Ultra Short Duration Fund (Direct) - Growth Option -5.22
DSP Bond Fund - Direct Plan - Growth -5.21
UTI Bond Fund-Growth - Direct -4.96
IDBI Short Term Bond Fund Direct Growth -4.77
UTI Dynamic Bond Fund - Growth Option-Direct -4.66
DSP Strategic Bond Fund - Direct Plan - Growth -4.42
Tata Treasury Advantage Fund Direct Plan Growth -4.06
BNP Paribas Short Term Fund Direct Plan Growth Option -3.83
DHFL Pramerica Credit Risk Fund Regular Plan Growth -3.63
DHFL Pramerica Credit Risk Fund Regular Plan Growth -3.63
UTI Credit Risk Fund - Growth Option-Direct -2.89
2 Likes
2

As the tv ad spots on mutual funds say …SAHI HAI

lol…

3

They also say “soch kar samajh kar invest kar”.

4

Has any liquid or ultra short term funds affected?

5

UTI Ultra short fund was the only unfortunate fund.

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6

Thank God I just happened to be lucky in that case as I have invested only in Franklin India ultra short term fund, but God knows how long I may remain happy, fingers crossed. :neutral_face:

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7

This is cause for grave concern. None of my funds were effected for sure but with incidents like this becoming so common, it’s only a matter of time before luck runs out. Where else can we invest in a tax efficient manner without much risk? The only reason I invest in debt MF and not bank FD is because of the indexation benefit after 3 years.

8

I’m too in this fund…franklin ultra portfolio looks good with several bonds so hope there are no surprises

9

Amen! Also I heard Franklin’s has the most efficient credit analysis team for their debt oriented portfolios, the minimum rolling return over 1 year period is 8% since it’s inception that says it’s grandiosity.

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10

Fund managers who skipped DHFL will be labeled as geniuses while those got hit will chalk it up to bad luck. in 2016, Franklin debt schemes took a hit of Rs 325 crores when JSPl defaulted. Every fund has it’s own stories. No fund manager is infaliable. No point in lioninizng the managers.

2 Likes
11

Yes me to

12

But comparatively they are at better position.

13

Hindsight bias sir. Time will tell.

1 Like
14

DHFL Pramerica Mutual Fund communication on the recent default by DHFL and the fall in NAVs

UTI Writes off its entire exposure to DHFL by 100%

Tata Mutual Fund creates a side pocket for its DHFL exposure

15

You are right and we all should keep that in our subconscious mind, whatever we see or judge based on rear view mirror, instead of predict the future we should better prepare for it.

16

What’s your opinion on Blackstone’s “bail out package” for DHFL??

17

Not a bail out. It’s an acquisition. It’s capitalism at work, the weak perish and the strong survive.

1 Like
18

This is always risk when investing in bonds. You can never be certain about liquidity of the issuer. I think that mutual funds will find way to get out from this terrible situation and recover on the other side. In the meantime, they would have to suffer some losses, and investors also

19

@RahulKhanna and others,

I have a question, can we invest after NAV is marked down as the effect is already priced in. Please throw some light on what does it mean by buying a fund whose NAV is marked down. Does it possess same risk?