Tata Corporate Bond Fund's exposure to DHFL papers rises from 28% to 37%. Should you worry?

Tata Corporate Bond Fund, the fourth largest holder of the troubled DHFL papers in terms of total portfolio allocation
as on April end, saw its total percentage exposure inch up in May. According to the monthly portfolio of the scheme, the scheme's total exposure to the downgraded securities was 36.83 per cent as on May 31, up from 28.21 per cent in April. Should investors be concerned?

Not really. In value terms, the scheme had an investment of around Rs 51 crore in DHFL papers as on April 30, which remains the same even in May. The percentage allocation has gone up mainly because of the heavy redemption faced by the scheme. In the last one month, the scheme’s assets have fallen almost by 25 per cent from Rs 184 crore as on April end to Rs 139 crore as on May end.


The schemes may have managed the heavy redemption by selling its liquid assets. As a result of this the percentage allocation of the remaining securities in the portfolio increased automatically. That means, the rise in the portfolio allocation to DHFL papers does not amplify the existing issues faced by the investors.

Also, the AMC has already provided load free exit period till June 14 to the investors in its three schemes- Tata Corporate Bond Fund, Tata Medium Term Fund and Tata Treasury Advantage Fund Fund - that have exposure to the downgraded DHFL papers.

After the expiry of the free exit load period, the AMC will create segregated portfolio f DHFL securities in the these three schemes. Tata Mutual Fund is the first AMC to o side pocketing of HDFL securities. For the terms and how will it work, read: Tata Mutual Fund approves creation of segregated portfolio of DHFL securities.