Debt mutual funds are often sold as an alternative to bank fixed deposits. But they are not entirely risk-free. Though debt funds may not be as risky as equity funds, they do come with the possibility of capital erosion.
Over the past 12-15 months, a spate of corporate bond downgrades and defaults have impacted the performance of debt mutual funds. Bonds issued by IL&FS, DHFL, Essel Group and Reliance ADAG Group were all been downgraded sharply. This led mutual fund companies marking down such distressed assets in the portfolio of the schemes that held them. Many debt funds, including liquid funds, witnessed a significant drop in their NAV (net asset value).
Given that the credit quality issue in debt instruments has been persisting for some time, investors can consider debt fund categories that focus on high credit quality, short-to-medium maturities and inherent high liquidity. These include overnight funds, liquid funds, money market funds, corporate bond funds, and banking and PSU debt funds.
Investors can choose debt schemes which have diversified allocation to different types of debt instruments. Such diversification offers liquidity while mitigating credit risk.
Overnight funds
Denne historien er fra September 16, 2019-utgaven av The Hindu Business Line.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra September 16, 2019-utgaven av The Hindu Business Line.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
Covid Presents An Opportunity For India
India must attract investors exiting China post-Covid. Streamlining of project clearances and relaxation in FRBM norms will help
Did Alternative Assets Shield You From Covid-19 Volatility?
The assets closely linked to stock and debt markets could not stave off the losses
How To Put Aircraft To Bed
Preserving grounded planes, to get them up and flying at short notice, is a challenging task. Ashwini Phadnis captures the process
There Can Be No Going Back On WFH
Covid-19 has fast-forwarded the shift to ‘work from home’. However, some face-to-face connect will always be needed
UN, WHO Urged To Ensure ‘Benefit Sharing' Of Covid-Related Data
Biopharma firms should reach vaccines, medicines to poor nations at an affordable price, say civil society bodies
With No Clear Signal From Rlys, States Explore Ways To Bring Back Migrants
Quarantine centres, cross-country buses being arranged even as migrants hop on to boats, trucks and ambulances
Centre Allows All Neighbourhood Shops To Open But With Riders
Final call will be taken by local authorities; shopping complexes that draw fewer ‘outsiders’ are permitted to operate
Covid Impact Relatively Muted In India
Compared to Italy and the US, India’s rate of infection spread has been slow. This can be attributed to the strict measures in place
How Global Trade Will Fare Post-Covid
China isn’t likely to lose its pre-eminent position soon. India, for one, will need to make manufacturing globally competitive
How To Curb Harassment In The Virtual Office
Training and sensitisation are essential. Institute a strict dress code and chat etiquette to ensure professionalism during video calls
