Aditya Birla Sun Life MF halts fresh subscriptions in two debt funds

Aditya Birla Sun Life Mutual Fund has decided to temporarily suspend acceptance of fresh subscriptions in two of its debt schemes with effect from Friday.

The two schemes are -- Aditya Birla Sun Life Medium Term Plan, which invests in instruments with a duration of 3-4 years; and Aditya Birla Sun Life Credit Risk Fund that predominately invests in AA and below rated corporate bonds, the fund house said in a notice on Thursday.

The move comes after Franklin Templeton MF last month closed six of its debt funds, citing redemption pressures and lack of liquidity in the bond markets.

In order to protect the interest of investors, Aditya Birla Sun Life MF said it has decided to temporarily suspend the acceptance of fresh subscriptions or switch in applications in two schemes with effect from May 22, 2020 till further notice.

Further, no fresh registration under systematic investment plan (SIP) will be accepted.

"We have stopped taking additional money in our credit oriented funds - Medium Term Plan and Credit Risk Fund. We believe that there are substantial gains in our funds which would be realized by the existing investors over next few months", the fund house said in a statement.

"Since we do not wish to dilute this for existing investors by taking more money in these funds, we have stopped fresh subscriptions in these funds. This is done in the interest of investors," it added.

Industry experts said except for government bonds and a few AAA names, other segments of the bond market are facing liquidity problems in the secondary market.