Page 19 - Banking Finance March 2023

MUTUAL FUND

Sebi proposes to intro- company spokesperson said. "This un- range bound movement of benchmark
derscores the confidence which the indices. Third, the macro-economic
duce 5 new categories un-
market has placed on the prudent capi- data is less than encouraging. Widen-
der ESG funds tal and liquidity management plan for ing fiscal deficit, dwindling exports,
the group." and high inflation are key concerns
Capital markets regulator Sebi has pro-
among investors.
posed allowing mutual funds to intro- An SBI MF spokesperson said it has no
duce five new categories under ESG further exposure. "SBI MF had an ex-
(environmental, social and gover- posure of around Rs 1,000 crore to SBI Mutual Fund launches
nance) scheme. The five new catego- Adani Group, which has been repaid on
SBI Dividend Yield Fund
ries should be exclusions, integration, maturity. We have no further exposure
SBI Mutual Fund announced the
best-in-class and positive screening, to the Adani Group," the spokesperson
launch of SBI Dividend Yield Fund, an
impact investing and sustainable objec- said.
open-ended equity scheme that will
tives.
invest predominantly in a well-diversi-
Presently, mutual funds can launch only Cash pile at mutual funds fied portfolio of equity and equity-re-
one ESG scheme under the thematic lated instruments of dividend yielding
is at two year high
category of equity schemes. companies.
The average cash holding of top 20
Considering that AMCs may want to The new fund offer (NFO) is open, and
mutual fund houses by Asset Under
launch multiple diversified ESG it will close for subscription on March
Management (AUM) was 5.9% at the
schemes under the ESG category, Sebi 6. The first-tier benchmark of the fund
end of January 2023. This is the high-
has proposed that each asset manage- is the NIFTY 500 TRI.
est cash proportion in the past twenty
ment company should be permitted to
five months or a little over two years, The investment objective of the
launch one ESG scheme each under the scheme is to provide investors with
according to the data compiled by a
five subcategories. opportunities for capital appreciation
domestic brokerage, Motilal Oswal Fi-
nancial Services. In February 2021, the and/or dividend distribution by invest-
Adani firm repays Rs 1,500 average cash holding was 3.1%. ing predominantly in a well-diversified
portfolio of equity and equity related
cr to SBI Mutual Fund, There are a few reasons for such a
instruments of dividend yielding com-
high average cash holding of top 20
Aditya Birla Sun Life panies, the press release said.
fund houses. First, the valuation of
Adani Ports and Special Economic Zone This is proposed to be achieved by in-
benchmark indices such as the Nifty 50
has repaid Rs 1,500 crore loan and will vesting in businesses across market
continue to remain high. According to
repay another Rs 1,000 crore in com- capitalisation, be style agnostic with no
analysts' estimates, the one-year for-
mercial papers due in March. sector bias, with attractive dividend
ward priceearnings (P/E) multiple of
yields plus potential growth in divi-
The Adani Group firm paid Rs 1,000 the Nifty 50 Index is 18. This is 8-10%
dends, and aim to achieve an aggre-
crore to SBI Mutual Fund and Rs 500 higher than the 10-year average P/E
gate dividend yield that is at least 50%
crore to Aditya Birla Sun Life Mutual multiple of the index. Also, the index
higher than that of the Nifty 50 Index.
Fund on commercial papers that ma- valuation is at around 25% premium to
The scheme will consider dividend-pay-
tured, as scheduled. other emerging markets compared
ing stocks that have paid dividends or
with the historical premium of 15%.
"This part prepayment is from the ex- repurchased shares in at least one of
isting cash balance and funds gener- The second factor is the market senti- the previous three fiscal years, the
ated from the business operations," a ments are weak as reflected in the fund house added.

BANKING FINANCE | MARCH | 2023 | 17