‘No fund house crosses SEBI’s exposure limits on AT1, AT2 bonds’

New Delhi: India’s fund houses do not cross the threshold set by SEBI directive on restricting their exposure to additional AT1 and AT2 bonds, a Crisil analysis of February 2021 MF portfolios showed.
Recently, SEBI restricted the exposure of mutual funds (MFs) to additional Tier I and II (AT1 and AT2) bonds.
The move has been termed as a risk mitigation measure to reduce portfolio risk in debt MF portfolios and comes after write-offs hit investors in such bonds issued by two banks in the past year.
The analysis of February 2021 MF portfolios shows that none of the fund houses crosses the threshold of 10 per cent of such instruments at the asset management company (AMC) level.
However, 36 schemes spread across 13 fund houses breach the cap of 10 per cent per scheme in securities.
The latest directive caps investments by a mutual fund house under all its schemes in bonds with special features to not more than 10 per cent from one issuer.