Prudential Asset Management Company on Thursday said it invested Rs 334 crore in its credit risk fund in the December 2019 quarter, a move that may encourage investors to put in their money in the fund.
The fund house has invested Rs 256 crore in December and Rs 78 crore in October. Credit risk funds invest mainly in corporate bonds that are below the highest rating assigned by credit rating agencies.
“At ICICI Prudential, we convey a lot about our values and beliefs that are ingrained in the risk management practices and investment process that we use. Simply put, we walk the talk,” ICICI Prudential AMC MD and CEO Nimesh Shah said in a statement.
“Speaking on behalf of the stakeholders, I can confidently say that we do eat our own cooking and invest side by side with our investors,” he added.
Joydeep Sen, founder of wiseinvestor.in, said, “It pays to invest with managers who invest in their funds. Investors want to know whether fund manager eats their own cooking. So, if anybody does it, it is a good indicator of future success and alignment of objectives. This way, fund houses can clearly demonstrate their conviction to investors and distributors.” Industry experts said it is encouraging for investors to see that fund managers believe enough in the fund to put their own money on the line.
Earlier in March 2016, Sebi made it mandatory for asset management companies (AMCs) to disclose in their Scheme Information Documents the aggregate investments made by AMC board of directors, fund managers and other key personnel.
Kotak Mahindra AMC in 2015 took a stance that made it mandatory for its employees to invest in their schemes. In March 2019, DSP AMC followed.
Credit risk fund was in news in 2019 after a series of defaults and downgrades shook up the NBFC space. But, these incidents affected only those fund houses that had exposure to those select papers.