Know The Risks In Debt Mutual Funds
Outlook Money|June 2020
It is better to understand the nature and play safe while investing in these debt instruments
Himali Patel
Know The Risks In Debt Mutual Funds

The turmoil in the debt funds space along with illiquidity issue in the credit markets has affected since the bankruptcy of IL&FS in September 2018. The onset of COVID-19 and the subsequent lockdown impacting the businesses has only added fuel to the fire in the credit market.

Further, in April 2020, Franklin Templeton (FT) Mutual Fund announced winding up of six of its credit-focused debt schemes. This was a rude shock to the entire debt mutual fund investors, who rushed to withdraw their investments from credit funds as well as other debt MF schemes. Although the debt-oriented categories witnessed a net inflow of ₹43,432 crore in April, the credit risk category, given its nature, was one of the worst-hit with a net outflow of ₹19,239 crore during the month. Investors in credit risk funds ran for exits after FT MF incident.

The uncertainty triggered by these events in the debt markets has not only restricted the fund houses’ ability to sell the securities but has made investors question fund houses whether to continue investing in debt funds or not. “When the economy is at the bottom levels and big crisis situations happen, like what we are facing today, the corporate bond markets become very illiquid. The price discovery and the trades happen mostly in OTC market which makes the depth also very poor. If there is a downgrade in any corporate debt paper, the instrument immediately becomes highly illiquid and will find no takers, this makes the life bit difficult,” explains George Heber Joseph, CEO and CIO, ITI MF.

هذه القصة مأخوذة من طبعة June 2020 من Outlook Money.

ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.

هذه القصة مأخوذة من طبعة June 2020 من Outlook Money.

ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.

المزيد من القصص من OUTLOOK MONEY مشاهدة الكل
Gold ETFs And FoFs
Outlook Money

Gold ETFs And FoFs

While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.

time-read
2 mins  |
November 2024
PLANNING TO BUY CHILD INSURANCE? THINK TWICE
Outlook Money

PLANNING TO BUY CHILD INSURANCE? THINK TWICE

Child insurance plans combine insurance and investment but often offer low returns due to high costs, making a combination of a term insurance cover and mutual fund a better option for securing your child’s higher education needs

time-read
7 mins  |
November 2024
How Do You Define Happiness?
Outlook Money

How Do You Define Happiness?

Money does buy happiness, but after a while, the appeal fades. We talk about our relationship with money, but, maybe, it’s time to revisit our relationship with happiness

time-read
5 mins  |
November 2024
Avoid Crypto As It Is Highly Volatile
Outlook Money

Avoid Crypto As It Is Highly Volatile

I am 22 years old and have recently started working. I want to invest a small portion of money in cryptocurrency. How should I go about it? Does it require a huge capital investment?

time-read
2 mins  |
November 2024
Invest Right, Don't Speculate
Outlook Money

Invest Right, Don't Speculate

The lure of high returns and quick gains from equity tips, cryptocurencies, and equity F&O can be enticing. But remember, return of capital is more important than return on capital

time-read
4 mins  |
November 2024
The Wedding & Budget: Is Minimalist Trend The Right Knot For You?
Outlook Money

The Wedding & Budget: Is Minimalist Trend The Right Knot For You?

Indian weddings are known for their pomp and grandeur, but minimalist weddings are also in vogue now. Dia Mirza was one such celebrity who went for a minimalist wedding. If you also want to keep things minimal on your big day, here’s how to do it

time-read
9 mins  |
November 2024
Here's How To Buy An ETF?
Outlook Money

Here's How To Buy An ETF?

Mutual funds are the preferred choice for retail investors. However, they come at a cost and fund management risk, apart from other risks. A smarter alternative is to invest through ETFs.

time-read
1 min  |
November 2024
How Passive Funds Help Diversify
Outlook Money

How Passive Funds Help Diversify

Passive funds provide a simple way to invest in broad markets as well as in specific themes and sectors, making them ideal for an investor's satellite portfolio

time-read
2 mins  |
November 2024
The Rise Of Passive Funds
Outlook Money

The Rise Of Passive Funds

The popularity of passive funds among retail investors has risen post Covid, and fund houses are out with many variations of ETFs and index funds. Does this category present a new opportunity for investors?

time-read
10 mins  |
November 2024
Tax Reforms: What's In Store?
Outlook Money

Tax Reforms: What's In Store?

The government is working on reforming the existing Income-tax Act, 1961. The impending reforms have raised many questions in the minds of taxpayers. Will the old regime and deductions be done away with? Will it really simplify your life? What's the need for these reforms? We try to answer these and other questions regarding tax reforms

time-read
10+ mins  |
October 2024