Many Mutual Funds Temporarily Suspend Fresh Subscriptions due to DHFL Impact
In our previous article, we talked about impact of DHFL interest payment delay on NAVs of mutual funds having exposure to its debt securities. Owing to the downgrade of DHFL’s debt instruments to default by various credit rating agencies, mutual funds had to take a large valuation cut, leading to sharp fall in NAVs over the last couple of days.
In case DHFL repays in the coming few days, there might be a sharp upward revision in NAVs of these schemes and new investors who enter the scheme post the default may claim the benefit of this at the expense of existing investor who suffered large losses. Hence, in the interest of existing investors, many mutual funds have temporarily stopped accepting fresh subscriptions into the affected schemes.
The following mutual funds have temporarily suspended fresh subscriptions by way of new/additional purchases and switch-in transactions:
Note: Above data is as per communication received from respective AMCs; L&T Money Market Fund has temporarily suspended fresh subscriptions/ switch-in transactions amounting to more than INR 25 lakhs per day per investor.
Investors are requested to note that suspension of subscriptions will continue till further notice from the AMCs.