InvestorQ : What does it mean when it says that UTI has side pocketed its exposure to Vodafone Idea? Why has it done that?
Anamika Sodhani made post

What does it mean when it says that UTI has side pocketed its exposure to Vodafone Idea? Why has it done that?

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Roshni Hegde answered.
8 months ago
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UTI Mutual Fund has stepped to segregate portfolios i.e. side-pocketing in five debt schemes. This will allow them to continue the holding of the debt paper of Vodafone Idea (VIL) but separately. The decision was taken after CARE downgraded VodafoneIdea to below-investment-grade.

After the segregation investors can not subscribe and redeem these selected schemes. Investors who would redeem their units will get NAV of the main portfolio and will continue to hold the segregated portfolio units separately,

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8 months ago
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Franklin Templeton was the first to side pocket the exposure to Vodafone Idea debt. After Templeton, UTI has joined the list of side pocketing their exposure to Vodafone Idea. This is necessitated after the huge AGR bill and the refusal of the promoters to infuse fresh capital into the company. Side pocketing means that the exposure is transferred to a separate fund and whenever anything is recovered it is added to the value of that fund. UTI holds Vodafone debt in its bond fund, credit risk fund, regular savings fund, dynamic fund as well as its medium term fund. The segregation was necessitated after CARE downgraded the debt paper of Vodafone Idea to below Investment Grade. UTI’s total exposure to Vodafone debt is Rs.186 crore and side pocketing will not allow traders to profit from the chaos. That is one of the advantages of side pocketing as it prevents the smart traders from making money at the cost of retail investors.

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