{"id":38848,"date":"2018-12-14T18:46:15","date_gmt":"2018-12-14T13:16:15","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=38848"},"modified":"2018-12-14T18:46:15","modified_gmt":"2018-12-14T13:16:15","slug":"how-side-pocketing-affects-mutual-fund-houses-investors","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/how-side-pocketing-affects-mutual-fund-houses-investors\/","title":{"rendered":"How side pocketing affects mutual fund houses, investors"},"content":{"rendered":"<p><a href=\"https:\/\/www.livemint.com\/Money\/MBiQMOtAhFZdNVgS7FIPeN\/How-side-pocketing-affects-mutual-fund-houses-investors.html\"><strong>How side pocketing affects mutual fund houses, investors<\/strong><\/a><\/p>\n<p><strong><u>News:<\/u><\/strong><\/p>\n<p>The Securities and Exchange Board of India (Sebi) has allowed mutual fund schemes the option of &#8216;side-pocketing&#8217; which will help both fund houses and investors.<\/p>\n<p><strong><u>Important facts:<\/u><\/strong><\/p>\n<p><strong><em>What is side pocketing?<\/em><\/strong><\/p>\n<ol>\n<li>It is an accounting method\u00a0used for segregating bad or illiquid assets from the healthier or liquid ones.<\/li>\n<li>It ensures that the money invested in a mutual fund liquid scheme, which is linked to stressed assets, gets locked, until the fund recovers the money from the company.<\/li>\n<\/ol>\n<p><strong><em>How will it help investors?<\/em><\/strong><\/p>\n<ol>\n<li>After segregation, Net Asset Value (NAV) will reflect the value of the liquid assets, with a separate NAV assigned to the side pocket assets based on an estimate of the realisable value for investors.<\/li>\n<li>Investments in the toxic asset will be closed for subscription, while investors can continue to subscribe to or redeem part of their investment in healthy assets.<\/li>\n<\/ol>\n<p><strong><em>How will it help fund houses?<\/em><\/strong><\/p>\n<p>After a paper defaults, there are a number of redemption requests. As a result, toxic assets form a larger part of the scheme. Side pocketing will help fund houses manage redemption pressures better, as other holdings will not be impacted.<\/p>\n<p><strong><em>Issues with Side-pocketing:<\/em><\/strong><\/p>\n<ol>\n<li>Side-pocketing may lead to Fund managers taking or credit risks to boost returns.<\/li>\n<li>Fund houses can misuse side pockets to protect managers\u2019 fees on the more liquid assets or to hide poorly performing assets or poor liquidity management by its fund managers.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>How side pocketing affects mutual fund houses, investors News: The Securities and Exchange Board of India (Sebi) has allowed mutual fund schemes the option of &#8216;side-pocketing&#8217; which will help both fund houses and investors. Important facts: What is side pocketing? It is an accounting method\u00a0used for segregating bad or illiquid assets from the healthier or&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/how-side-pocketing-affects-mutual-fund-houses-investors\/\">Continue reading <span class=\"screen-reader-text\">How side pocketing affects mutual fund houses, investors<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-38848","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704874825},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/38848","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=38848"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/38848\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=38848"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=38848"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=38848"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}