Fund houses thrive on volume and their profitability depends on how fast they can grow. Like most fund houses, HDFC AMC too took a hit from the series of defaults by several companies triggered by Infrastructure Leasing and Financial Services Ltd’s (IL&FS) debacle last year. The fund house took on bonds of the defaulting Essel Group from its fixed maturity plans (FMP) to provide relief to investors during the quarter. If the group is unable to repay these bonds at maturity, HDFC AMC shareholders would take a hit. Questions have already been raised as to how much the fund house can bail out its investors by asking shareholders to take a hit.

Source: Mint July 17, 2019 04:52 UTC