Debt funds have eroded substantial investor wealth over the past few months. Are they worth the risk?
Mutual fund assets under management have almost doubled to 23.42 lakh crore in the past three years. Although the growth has been led by equity funds, the largest chunk of mutual fund money is still parked in debt funds — they account for more than half the assets and have seen 48 per cent absolute growth over the past three years, as per data provided by Icra Online. Although institutional investors are the major holders, retail investors have also been increasing their exposure to debt funds over the past few years to beat the low bank fixed deposit rates. Individual investors’ share in debt funds (retail and high net worth individuals) has gone up from 28 per cent to 32 per cent in the past three years as debt fund returned more than fixed deposit rates in 2016.
All this has changed over the past few quarters. Debt mutual funds have suffered massive losses that have wiped off half the value of some funds in a single day (See Unprecedented Losses). The trigger has been defaults by some big names in the non-banking finance company (NBFC) sector and lowering of ratings of papers issued by a number of NBFCs. In fact, after IL&FS defaulted on its loans, some liquid funds (considered safe) delivered negative returns to the tune of 5 per cent in a day. This has shaken the confidence of investors. Does all this makes debt funds a bad option?
How it Started
Financial planners advise you to have some allocation to debt funds as they are less risky than equities. “The role of a debt fund is to meet shortterm goals and provide a cushion to the portfolio. We need to ensure that the money invested in debt has some capital protection and liquidity,” says Shweta Jain, Founder, Investography.
Esta historia es de la edición July 14, 2019 de Business Today.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición July 14, 2019 de Business Today.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
"Moving to cloud helped us grow❞
What was the problem you were grappling with?
She's Got Time
MORE WOMEN ARE BECOMING WATCH CONNOISSEURS, SEEKING OUT BOTH JEWELLED AND TECHNICAL WATCHES FOR THEIR STYLE AND CRAFTSMANSHIP
RISING STAR
PARUL GULATI IS a name that's been steadily gaining prominence in the Indian entertainment industry after she appeared on season 2 of Shark Tank in 2023. She has become a multifaceted personality who effortlessly transitions between acting and entrepreneurship.
Building on a Legacy
WHEN ZAHABIYA KHORAKIWALA stepped into her role as Managing Director of Wockhardt Hospitals over a decade ago, she confronted formidable challenges that have since turned into achievements.
LEADER IN INNOVATION
AS FEDEX'S PRESIDENT (Middle East, Indian subcontinent and Africa), Kami Viswanathan has a lot on her plate.
WAITING IN THE WINGS
Here are those who missed out as they have not yet completed a year in office; they'll be strong contenders in 2025
A DECENT PROPOSAL
IN TODAY'S WORLD OF TRYING TO CREATE AN EQUITABLE SPACE, BOTH MEN AND WOMEN CONTRIBUTE TO THEIR HOUSEHOLDS. WOMEN ARE ENCOURAGED TO HAVE THEIR OWN SAVINGS POOL AND INVESTMENT ROUTINE. GIVEN THIS, HOW SHOULD FUTURE BRIDES APPROACH FINANCIAL PLANNING?
Women and the STEM Bias
EMPOWERING WOMEN IN STEM WILL NOT ONLY BENEFIT INDIVIDUALS, BUT ALSO STRENGTHEN THE ENTIRE INDUSTRY, DRIVING INNOVATION AND PROGRESS.
ROCKET WOMEN
WOMEN IN INDIA ARE NOT ONLY VENTURING INTO SPACE BUT ARE ALSO STARTING TO SPEARHEAD THE COUNTRY'S EFFORTS IN THE GLOBAL SPACE RACE.
ONE STEP FORWARD
THE NUMBER OF WOMEN INDEPENDENT DIRECTORS IS GROWING STEADILY, BUT IT'S A LONG WAY FROM GENDER PARITY. MUCH MORE NEEDS TO BE DONE TO BREAK THE GLASS CEILING IN BOARDROOMS.