Aditya Birla Sun Life MF stops fresh flows in two credit-oriented schemes

The Aditya Birla Sun Life Mutual Fund (MF) has suspended fresh subscriptions to its credit-oriented schemes credit risk fund and medium duration fund, in order to avoid dilution of gains for existing investors from the expected recoveries.

“We believe there are substantial gains in our funds which would be realised by the existing investors over next few months. Since we do not wish to dilute this for existing investors by taking more money in these funds, we have stopped fresh subscriptions in the interest of investors,” the fund house said in a response.

The barring of subscriptions is effective from May 22, 2020. Apart from fresh subscriptions, switch-in applications, fresh registration of systematic plans have also been stopped in the schemes till further notice.

Meanwhile, redemptions will continue for the existing investors.

“This is a good move. The asset size of schemes had dropped and some investors have exited, but paid price of liquidity as they have exited at NAVs that accounted for the mark-down impact,” said Amol Joshi, founder of Plan Rupee Investment Services.

“However, smart money can still benefit from the recovery by entering in the schemes with few days of holding period,” he added.

The assets under management (AUM) of Birla Sun Life Credit Risk Fund stood at Rs 2,016 crore at the end of May 20, 2020, while that for Medium Term Plan stood at Rs 2,144 crore.