The maturity of Indian capital markets is re-established with proper functioning of the Side Pocketing facility instituted for MFs. In 1998-2003, when US 64 scheme of UTI faced depreciation in NAV below face value, GOI pumped in money and paid Rs.10 face value to outstanding unitholders. GOI created SUUTI and over a period of time, the market value of assets managed by SUUTI grew manifold leaving investors to forget what actually, otherwise would have been theirs. Investors had long before settled claims for Rs10 already with GOI, due to lack of law to deal with such situations. Subsequently in the debt market, when asset value depreciated due to industry wide factors, side pocketing came to the help of investors unlike GOI or somebody pumping money to pay face value. Here is a write up on different schemes from UTI MF, how it used the side pocketing and segregated folios system.
UTI Mutual Fund on Monday Feb 17, 2020 said it has created a segregated portfolio for debt securities of Vodafone Idea, after Care Ratings downgraded the telecom major’s debt securities below investment grade. The fund house hold Vodafone Idea’s debt securities -- worth around Rs 186 crore -- in its UTI Credit Risk Fund, UTI Bond Fund, UTI Regular Savings Fund, UTI Dynamic Bond Fund and UTI Medium Term Fund. It said that upon recovery of money from Vodafone Idea in the segregated portfolio, the money recovered will be distributed to investors in proportion to their holdings in the segregated portfolio
The six schemes of Franklin Templeton Mutual Fund (MF), which are under wind-up, received payments of Rs 1,252 crore by 10th July 2020. Apart from FT MF, UTI MF received approximately Rs 161 crore of payments and Nippon MF 100 per cent of our outstanding from Vodafone, which is Rs 121 crore also received payments. Some of the fund houses still hold some exposure to debtpapers of Idea that are maturing in 2022.
The impact of the decision taken by Vodafone and Aditya Birla Group to no longer infuse capital in the ailing Indian arm may have a spillover effect on the debt exposure of mutual fund houses to the entity. The company may be on the brink of a collapse if it has to pay $4 bln in statutory dues. It has sparked concerns among investors over the company's inability to service the debt. Any default may also spark rating downgrades and erosion of scheme values. On account of this, mutual fund investors may redeem their investments in schemes that have exposure to Vodafone-Idea debt papers. According to data from Morningstar India, 36 mutual fund schemes had exposure to the corporate bonds of Vodafone Idea to the tune of Rs 3,376crore as on October 31, 2019.
UTI has received maturity payment of Rs.572.61 crores for NCDs of Vodafone Idea Ltd. (along with accrued interest) of ISIN INE669E08284 across schemes as informed by UTI MF on Jan 28, 2022. In case of UTI - Fixed Term Income Fund Series XXX-IX (1266 Days), UTI - Retirement Benefit Pension Fund, UTI - Unit Linked Insurance Plan and UTI - CCF - Saving Plan, the impact on receipt of maturity proceeds is reflected in the NAV of the respective schemes.In case of segregated portfolio of UTI - Bond Fund (Segregated - 17022020), UTI - Regular Saving Fund (Segregated - 17022020), UTI - Dynamic Bond Fund (Segregated - 17022020) and UTI - Medium Term Fund (Segregated - 17022020); the maturity proceeds will be credited to investor’s registered bank account in proportion to their unitholding in segregated portfolio. In case investor has opted for auto switch of maturity proceeds, the same would be switched to the selected scheme.
The government finds itself the owner of a 35.8%
stake in Vodafone Idea after the promoters, as widely expected, opted to
convert the interest due on spectrum payments and adjusted gross revenue (AGR)
into equity at par on Jan 12, 2022. The two promoters - the government is not
classified as one and does not plan an active role in management - continue to
own 42%. The stock closed down 19.5% as markets reacted negatively to the
conversion rate.
Notwithstanding, the move will likely help the
company raise funds as its credit outlook will improve. Interested private
equity (PE) investors will be comforted by the government's stake as the
chances of the company going into liquidation have significantly decreased.
Initial commentary from brokerages and bankers is that the company is out of
the woods.
In case of segregated portfolio of UTI - Credit Risk Fund (Segregated - 17022020), the maturity proceeds from ISIN INE669E08292 is expected on January 31, 2022, thus we will be combining maturity payouts for both ISINs (ISIN INE669E08284 and ISIN INE669E08292) and the same will be made after January 31, 2022. The net combined maturity proceeds will be credited to investor’s registered bank account in proportion to the unitholding in segregated portfolio. In case investor has opted for auto switch of maturity proceeds, the same would be switched to the selected scheme. In the absence of bank account details, the physical warrant for maturity proceeds will be dispatched to investor’s address registered with us.For scheme specific details of the maturity proceeds, click here.We will be sending a communication to investors regarding the same.
UTI
Mutual Fund Product Labelling
|
Fund Name |
The product is suitable for investors
who are seeking:* |
Riskometer# |
Potential Risk Class Matrix |
|
UTI - Fixed Term Income Fund Series
XXX-IX (1266 Days)- (A close ended debt scheme). Moderate interest rate risk
and relatively high credit risk |
• Regular income for fixed term |
 |
 |
Potential Risk class matrix w.e.f
December 01, 2021.
|
Fund Name |
The product is suitable for investors
who are seeking:* |
Riskometer# |
|
UTI - Unit Linked Insurance Plan |
• Long term capital appreciation |
 |
|
UTI - CCF - Saving Plan |
• Long term capital appreciation |
|
|
UTI - Retirement Benefit Pension Fund |
• Long term capital appreciation |
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