Mutual Fund exposure to Real Estate NCDs

By Morningstar Analysts |  15-05-19 | 
 

Non-convertible debentures issued by real estate developers are a high-return, high-risk investment. These Real Estate NCDs are used to raise short-term secured loans from investors.

Investors concerned over mutual fund exposure to this stressed sector need not worry. (Do read Why debt fund investors are worried for perspective.)

Bloomberg utilized Morningstar data as on March 31, 2019, and noted that mutual funds’ investment in real estate debt accounts for 2% of the industry’s exposure to longer-dated paper. Total assets of income and liquid schemes, which invest in long-term debt, stood at Rs 10.9 lakh crore as of March (Association of Mutual Funds in India – AMFI). Of this, the market value of investments in Real Estate NCDs is Rs 21,462.8 crore. There is no evidence of any stress on any of these investments.

The schemes with exposure over 15% of their assets, according to March 31, 2019 portfolios

THE FINAL

The exposure of AMCs to Real Estate NCDs, according to portfolios of March 31, 2019

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 Exposure to issuer, as on March 31, 2019

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