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The Amtek Auto crisis has not only caused panic among the investors of JPMorgan Mutual Fund but also among debt investors. According to industry players, queries of panicked investors are forcing top executives of various fund houses to work overtime to assuage their concerns.
JPMorgan Mutual Fund had exposure of nearly Rs 190 crore to Amtek Auto debt paper through two of its schemes. The debt paper was due for redemption on Monday, however, the auto components maker defaulted on its repayment obligation.
Senior executives at various fund houses have been busy conducting meetings and attending calls of institutional investors to ease their concerns.
“Post-2008 crisis, it’s the first time I am witnessing such a scrutiny of our portfolios. Situation appears quite uncertain and investors do not want to take any chance,” said the chief executive officer (CEO) of a state-owned bank-sponsored assets management company (AMC).
Industry players say they are trying to reach out to investors through video conferences and in-person meetings to address the concerns.
“The confidence in debt MFs has taken a hit. Investors are closely analysing debt portfolios to which they have exposure. Most institutional investors have exposure running into hundreds of crores,” said a national sales head of a large fund house. Fund managers have prepared presentations detailing their holdings and credit ratings.
“The presentations we are giving to investors explain the investment rationale. Investors want to understand whether their investments are exposed to any disproportionate risk,” said the chief investment officer of a fund house.
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Given the situation, safety and liquidity has become more important than a few basis points of extra returns, he added. Around Rs 1 lakh crore of mutual funds’ assets under management are exposed to papers, where the credit risk is perceived to be higher, according to industry players.
On asked whether investors will turn wary towards debt MFs, industry players said public memory was short and if there wasn’t a repeat of Amtek-like situation, investors would continue to put money in debt schemes. Interestingly, fund managers are not just facing external pressure but have a lot of answering to do internally as well. According to sources, trustees and the senior management at various AMCs are asking fund managers about their debt exposure, asset quality and liquidity.
