Debt Mutual Funds with exposure to Vodafone-Idea Bonds


Vodafone-Idea posted a quarterly loss of nearly ₹51,000 crore for the quarter ended September 2019. Vodafone Group Plc chief executive officer Nick Read has said that the company may head for liquidation of its India business if the government does not ease spectrum fees, Bloomberg reported.

There is a high chance that the bonds issued by Vodafone-Idea may be downgraded by the rating agencies which will result in losses in the debt fund who are holding such papers.

According to data from Morningstar India, 36 mutual fund schemes (both open and close-ended) across four fund houses- Aditya Birla Sun Life, Franklin Templeton, Nippon India and UTI had exposure to the corporate bonds of Vodafone Idea to the tune of Rs 3,376 crore as on October 31. In terms of value, at the end of Oct 2019 Franklin Templeton Mutual Fund had the highest exposure of about Rs 2,058 crore through six of its schems.

The rating downgrade has not happened yet but if and when it happens, the Debt Mutual Fund companies will have to mark down the values of the Vodafone-Idea bonds they are holding.

We recommend investors to move out of the debt funds having more than 2% exposure to Vodafone-Idea bonds into safer liquid funds of the same fund house or Goalwise recommended debt funds which don't have any such exposure.

Note: Please check your exit load and tax implications before you redeem your funds though. If the % exposure to Vodafone-Idea bonds is more than the exit load and tax impact then you should consider moving otherwise you can stay put.

List of Open-Ended Debt Mutual Funds with exposure to Vodafone-Idea Bonds:

Debt-Mutual-Funds-Vodafone-Idea

We'll keep updating this list as we get more information.

Media coverage:
https://www.livemint.com/money/personal-finance/worried-about-your-debt-fund-exposure-in-vodafone-idea-papers-here-s-what-to-do-11573809468223.html
https://economictimes.indiatimes.com/mf/analysis/funds-with-voda-idea-paper-may-come-under-redemption-pressure/articleshow/72064328.cms
https://www.moneycontrol.com/news/business/vodafone-idea-debt-papers-in-36-schemes-time-to-reflect-on-fair-value-nav-for-mfs-4642411.html