UTI Credit Risk Fund’s NAV jumps 8.44% in a day
On September 22, the net asset value (NAV) of the UTI Credit Risk fund, a debt-oriented plan, increased by 8.44 percent after the fund house evaluated its existing DHFL bonds at Rs 20.5. When DHFL’s rating was cut to D, the fund house reduced the security’s value to zero.
“With the ongoing developments in the DHFL resolution process, UTI MF reviewed and amended the valuation of existing DHFL bonds to Rs. 20.50 per face value of Rs 100 in line with the weighted average price supplied by valuation agencies,” according to a UTI MF representative. The fund has DHFL bonds worth Rs 195 crore. According to industry insiders, if the NCLT resolution in DHFL is approved, the fund house could receive 42 percent of the money back.
To prevent new participants from taking advantage of money coming back into the program, the fund company increased the exit load in the scheme to 5% if investors departed before a year on September 17.
According to SEBI classification regulations, credit risk funds must invest at least 65 percent of their assets in less than AAA instruments. As of August 31, 2021, the scheme had Rs 411 crore in assets under administration.