Building All-Weather Debt Portfolio

You may have heard of an all-weather equity portfolio, but an all-weather debt portfolio is as crucial for long-term capital protection. This article will help you understand and develop an all-weather debt portfolio for yourself

A majority of retail investors put their money into equity mutual funds. This is clear from data published by the Association of Mutual Funds in India (AMFI). Retail investors, including high net worth individuals, account for 88 per cent of equity-oriented schemes' assets as of July 2022. When it comes to debt funds, institutional investors are the primary investors. Institutional investors own 87 per cent of liquid and money market schemes and 60 per cent of other debt-oriented schemes.

Institutional investors own the lion's share (90 per cent) of exchange-traded funds (ETF) and fund of funds (FOFs). This demonstrates that retail involvement in debt funds is fairly low when compared to institutional participation. However, it still owns 40 per cent of the overall debt mutual fund assets. Investing in debt funds is frequently regarded as a safe haven, and is sometimes likened to bank fixed deposits (FDs). However, debt mutual funds provide much more. Debt mutual funds, like equity mutual funds, have a number of funds to meet a variety of needs.

Furthermore, based on the investing horizon of your financial objective, it is pretty convenient to invest in them. If your investing horizon is three years, you can invest in debt mutual funds with a three-year average maturity. However, investing in debt funds, or any fixed income product for that matter, may be difficult at times. This is due to the fact that timing the investment in debt funds is sometimes more crucial than timing the investment in equity funds.