BOI AXA MF takes NAV hit on three funds; credit risk fund NAV falls 50%

The net asset values (NAVs) of three BOI AXA debt schemes — BOI AXA Credit Risk Fund, BOI AXA Conservative Hybrid Fund and BOI AXA Short-Term Income Fund — fell in the range of 2-50 percent on April 23 after the fund house said it will markdown its exposure in select debt securities held in its portfolio.

The fund house wrote down its entire holding in Dewan Housing Finance Corporation Ltd. and Avantha holdings from earlier levels of 75 percent.

On the other hand, it increased its haircut in three papers — RKV Enterprise, Accelerating Education and Coffee Day Natural Resources from 50 percent to 90 percent.

The fund house also marked-down Dinram Holdings by 50 percent and Amantha Healthcare by 75 percent.

In fact, five of these seven securities were already marked-down in the past when the debt crisis broke out.

As of March 2020, BOI AXA Credit Risk Fund manages AUM worth Rs 167 crore.

“Considering the severe illiquidity in the debt market, it’s estimated that the securities in the portfolio may not be reflecting the realisable value that should form the basis of valuation of NAV of the funds where these securities are held,” BOI AXA said in a statement.

“Hence, the Valuation Committee of BOI AXA Investment Managers on April 24, 2020, has revalued the illiquid and/or thinly traded securities across the portfolios,” the fund house added.

Unfortunately, the markdown, which came into effect on April 24, has wiped out all that was gained by investors in the last one-year and three-year time frames.

This comes after Franklin Templeton Mutual Fund wound up six yield credit strategy-oriented debt mutual fund schemes from April 23 claiming “severe market dislocation and illiquidity” due to the novel coronavirus pandemic.

Also read: Franklin Templeton Crisis | What you need to know as a mutual fund investor