Income funds' net-asset values crash
Aabhas Pandya
NEW DELHI, January 20: The net asset values (NAVs) of many open-ended income funds have witnessed a drop after the RBI hiked the bank rate and cash reserve ratio (CRR). However, the fall in NAV varies from fund to fund, depending on a host of factors including the percentage of portfolio marked to market, the cash component and portfolio diversification.Few funds have managed to maintain status quo, while some have witnessed an appreciation in NAV. The fall has been sharper in funds with a smaller corpus as they normally mark to market 100 per cent of their portfolio. The depreciation of NAV has been the maximum for Chola Triple Ace, which has fallen by 14 paise to Rs 11.77 in the cumulative option. In the dividend option, the fall is around 13 paise. This translates into a decline of 1.18 per cent and 1.16 per cent over last Thursday's level of Rs 11.91 and Rs 11.19, respectively. Chola is followed by ITC High Interest, where the decline has been 10 paise from Rs 11.38 on Friday to Rs 11.28 on Monday.While the growth option of Templeton Income's growth option has fallen by 7 paise to Rs 11.31, that of the income option has remained static at Rs 11.48. Sources say Templeton has kept a large portion of the corpus under income option as cash as a dividend payout is expected next month on completion of one year. JF Bond Fund lost five paise or 0.49 per cent on Monday as the NAV declined from Rs 10.20 to Rs 10.15. The fund, with a corpus of Rs 11 crore, has 100 per cent traded debentures while it has a 15 per cent exposure to the money market. Interestingly, the NAV of DSPML’s bond fund has seen a rise despite the upheaval in the debt market. The gain, although marginal is significant as the bond fund had a large exposure to the government of India (GoI) securities as of October, 1997, which have crashed by almost 6 per cent. This indicates that the fund has moved out of the GoI segment. The only other funds to appreciate are Cash Plus, a quasi MMMF, and Income Plus, both from Birla Capital
International. The NAVs have risen by two paise each to Rs 10.63 and Rs 13.53, respectively. Now that funds have changed the mark to market of their debt portfolio, the NAVs are expected to stabilise. In fact, funds with a high cash position are expected to see their coffers brimming due to the high call rates. As a fund manager quipped: "At present, 40 per cent of our corpus is in cash and, hence, we expect to gain from the high call rates".
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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