Page 18 - Banking Finance June 2019

MUTUAL FUND

HDFC & Kotak MFs re- Saravana Kumar as new CEO for Essel Mutual Fund
Saravana Kumar has been appointed by the board of Essel
ceive notice from SEBI on
Finance AMC has appointed as the new CIO of its Essel Mu-
FMP roll over tual Fund business. Before taking charge of Essel MF, Kumar
HDFC Asset Management Company was associated with LIC Mutual Fund as its Chief Investment
Ltd. and Officer (Debt, Equity and PMS). Essel Mutual Fund's assets
K o t a k under management stood at Rs 1,052 crore as at April-end
Mahindra 2019.
M u t u a l
Kumar has experience of more than three decades of investment management
Fund have
experience over asset management, banking, insurance, and portfolio manage-
r e c e i v e d
ment services as informed by Essel Finance.
show-cause notices (SCN) from the
Over the last one month, a number of exists were observed by the Essel Mutual
securities market regulator, Securi-
Fund. The Chief Executive Officer of Essel Mutual Fund Rajiv Shastri quit to join
ties and Exchange Board of India
Muthoot Mutual Fund.
(SEBI), in connection with the default
of payment on maturity of fixed
monthly plans (FMP). MF holdings of auto stocks register record low
Study by Motialal Oswal Securities reveals that Mutual Fund's holdings of auto
HDFC confirmed having received two
sector stands at a record low in April. It further said
show-cause notices recently with re-
that the weightage of the auto sector achieved a new
gard to its debt investments in Essel
low of 6.3 per cent.
group. The provision to recover the
dues through the sale of pledged The repercussion led the auto sector downward to
shares was not adopted by these seventh position as far as the mutual fund's alloca-
fund houses. According to SEBI, in- tion is concerned. 12 months ago, the auto sector was
vestors are suffering losses due to at the second position. The performance of mutual
the inability of these fund houses to funds has not been that satisfactory during the month of March, 2019. Accord-
sell the pledged shares of Essel ing to the study, 60% of the top-25 schemes closed lower in April.
group, which stands as an important
The areas of technology, cement, healthcare, private banks and capital goods
reason for issuance of SCN's.
have witnessed considerable increase in the month of April, while they reduced
The investment manager of HDFC holdings in PSU banks, NBFCs, utilities, oil and gas, chemicals, autos and infra-
Mutual Fund said, "We are working structure.
with our legal advisors and are in the
process of responding to the said
IDFC Mutual Fund opens Focused Equity Fund for
SCNs." With the Essel group being
debt-ridden, two of its companies lumpsum investment
failed to repay the investment in IDFC Mutual Fund announced the removal of restriction of Rs 2 lakh per trans-
FMPs. In April, the investors of two action in IDFC Focused Equity Fund, effective from
fund houses were in for an unpleas- May 17. The IDFC Focused Equity Fund is an open-
ant surprise after their money being ended equity scheme that invests in maximum 30
invested in the troubled Essel group, stocks with the flexibility to invest across sectors and
showed no signs of returns close to across market cap.
the maturity.
Back in 2017, when the fund witnessed large flows
While Kotak Mutual Fund paid the within a short period, IDFC AMC had decided to put in a restriction of Rs 2 lakh
principal amount and offered to pay per transaction to moderate the flows and maintain the investment style. Post
interest component on realizing the re-categorisation of funds late last year, given the well-defined market cap
dues, HDFC has proposed an exten- buckets, we see ample opportunities in the mid & small cap space as well as
sion of the maturity by one year. the large cap space, the fund house said.

18 | 2019 | JUNE | BANKING FINANCE