Debt asset quality of ICRA rated schemes remains stable
ICRA Ratings has come out with its report on asset qualities of its rated debt schemes, Feb 2012. According to the rating agency the credit profile of its rated debt funds are expected to remain stable, as the fund managers are likely to continue with their risk-averse investment strategy.
February 02, 2012 / 17:49 IST
ICRA Ratings has come out with its report on asset qualities of its rated debt schemes, Feb 2012. According to the rating agency the credit profile of its rated debt funds are expected to remain stable, as the fund managers are likely to continue with their risk-averse investment strategy.
Higher risk adjusted returns aids growth in industry debt assets under management; Debt asset quality of ICRA rated schemes remains stableICRA has ratings outstanding on 93 Liquid/Debt Mutual Fund (MF) schemes1 across 24 Asset Management Companies (AMCs) as on date. An analysis of the credit quality across the ICRA-rated schemes reveals that over 97% of the schemes continue to qualify comfortably for the highest rating levels within their respective maturity categories, while the balance qualify for the next rating level. During YTD FY12, the credit ratings of ICRA-rated schemes remained stable with no rating revisions with the schemes maintaining very high proportion of their investments in high credit quality debt instruments.With volatility of returns across equity funds over the last few quarters, the debt category has emerged as a preferred investment option aided by higher returns amid a rising interest rate scenario. MF Industry debt AUM registered a 10% Y-o-Y increase for the 12M period ended Dec 31, 2011, driven by increase in assets under management (AUMs) of liquid funds and fixed maturity plans (FMPs). The overall industry AUM witnessed a moderate decline during the period, marked by a steep decline in equity AUM, driven by volatility of returns in the equity market. In line with the overall industry trend, the AUM of ICRA-rated debt schemes witnessed a 14% increase Y-o-Y as on Nov 30, 20112 and accounted for nearly 37% of the industry debt AUM as on that date.As per AMFI data, the growth in the debt AUM has been fuelled by high net worth individuals (HNIs) who now account for ~25% (as on Sep-11) of the investments into debt schemes (~19% as on Sep-10). While the proportion of Corporate Investments and retail participation across debt Mutual fund schemes have remained fairly stable at ~62% and 5% respectively for the 12M period ended Sep 30, 2011; banks have pared their investments in debt mutual funds in line with the regulatory requirement that mandated banks to curtail their exposure to debt mutual funds to 10% of their previous year
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