Page 16 - Banking Finance April 2021

MUTUAL FUND

As per the report, only 3.45% of large The deemed residual maturity for are diversified geographically with
cap funds beat the benchmark in the Basel III Tier-2 bonds will have a period investments in both developed and
lockdown year. The proportion was of 10 years, till March 31, 2022 or will emerging markets and all nine sub-
higher for mid caps (24%) and small be based on the contractual maturity themes.
caps (8.70%). In case of multi caps, just period, whichever is earlier. The
11.76% of funds beat their periods for such bonds thereafter will The underlying fund undertakes
benchmarks. be bound through the contractually detailed ESG assessment and once it is
satisfied that the company has an
The failure to beat came despite agreed maturity periods. enduring business model and a
strong performances by various mutual sustainable growth path the
fund categories in the lockdown year. HSBC Mutual Fund company's stock is available for
According to the report, large cap
funds on average delivered 77.76%, introduces Global Equity inclusion in the portfolio.
mid cap funds gave 96.53% and small Climate Change FOF
cap funds delivered 117.59%. Aditya Birla Sun Life
However, all of these returns fell well HSBC Asset Management India has Mutual Fund asks for
recently announced the launch of
short of indices. For instance, large cap
funds on average underperformed by HSBC Global Equity Climate Change rollover of 6 fixed maturity
14.11%, mid caps by 10.89% and small Fund of Fund. It is an open-ended plans
caps by 16.39% implying that investors scheme investing in HSBC Global Aditya Birla Sun Life Mutual Fund has
lost out on a large chunk of returns. Investment Funds - Global Equity
Climate Change. The scheme will be recently asked for rollover (extension)
SEBI: Mutual funds to managed by Priyankar Sarkar and will of 6 fixed maturity plans (FMPs).
treat perpetual bonds as be benchmarked against MSCI AC The six FMPs are Aditya Birla Sun Life
World TRI. Fixed Term Plan Series OZ, PA, PC, PF,
100-years papers PK, PI and PJ. These were launched in
According to the press release, it is the
SEBI has recently issued a circular first-of-its-kind, fund of fund investing January-March, 2018 and set to
clarifying the valuation of bonds issued mature in April, 2021. The fund house
in an underlying fund which has a
under the Basel III framework. SEBI thematic focus on climate change. The has asked for extension to different
has amended the valuation rule
scheme will invest predominantly in dates ranging from November, 2022 to
attached to perpetual bonds. The April, 2023. The schemes have
deemed residual maturity of Basel III the units of the HSBC Global delivered CAGR returns of 7.3-7.8%
Additional Tier-1 (AT-1) bonds will be 10 Investment Funds - Global Equity since launch.
years, mentioned in the circular. Climate Change. The scheme may also
invest a certain proportion of its corpus The notice said, "Owing to low yields
As per the revised circular, for
in money market instruments and/or on offer to investors it will be prudent
valuation, the deemed residual units of overnight/liquid mutual fund
maturity for Basel III AT-1 bonds are as for existing investors to make
schemes, in order to meet liquidity maximum use of indexation benefit
follows:
requirements from time to time. and opt for extending the investments.
Y 10 years: Time period up to 2022.
The underlying fund has identified 9 Further the massive bond rally in the
Y 20 years: Time period falling sub-themes to address the challenges previous year fuelled by aggressive rate
between Apr. 1- Sep. 30, 2022 30 ranging from renewable energy and cuts and accommodative stance of the
years
energy efficiency to clean RBI has pushed rates lower. Therefore,
Y 30 years: Time period falling transportation and natural capital. The re-setting of maturity will offer an
between Oct. 01, 2022 to Mar potential investments are selected for opportunity for investors of the
Y 100 years: Time period Apr. 01, alignment with the theme, including respective schemes to get extended
2023 onwards (100 years from the their carbon footprint and ESG score long term capital gain benefit for their
issuance of bonds) are checked. In addition, the holdings existing investments." T

16 | 2021 | APRIL | BANKING FINANCE