On December 1, you would have received text messages from various AMCs on the ‘Potential Risk Class Matrix’ (PRC) of the debt schemes you hold. If you’re worried about any change in risk profile of your fund based on this, you should read this article.
Potential Risk Class matrix for debt funds – what should you do? Read More »
Today, we’re going a step further and drawing up a debt fund portfolio you can use for a specific timeframe – and that is a timeframe that’s 3 years and longer.
Prime Recommendation: A debt fund portfolio for long-term holdings Read More »
Prime Strategy: How to invest in debt funds now?
If you had invested in an ultra-short debt fund like Axis Treasury Advantage 3 years ago, your returns would be 7.3% CAGR now. Not bad at all by today’s standards, right? If you invested in the same fund 2 years ago in November 2019, your returns would be 6% – still not terrible. But what if you had invested in this fund just a year ago?
Prime Strategy: How to invest in debt funds now? Read More »
one good way to de-risk your equity fund portfolio from a market fall would be to switch from funds following a momentum style of investing to those following a value or contrarian style or funds with a value-oriented approach. Value funds typically buy fundamentally sound companies that trade at a discount to their intrinsic value in the markets.
5 ways to de-risk your equity funds, without cashing out Read More »
With interest rates being where they are – i.e., stable with no clear signs of a move upwards or downwards – you would wonder where you could hold investments meant for a 2-3 year timeframe. And many of you also wonder if the best option you have is to go for floating rate debt funds as they would have an edge over other debt fund categories.
Prime Recommendation: 2 floating rate debt funds for medium time frames Read More »
The onset of the second wave of Covid has put long-term debt investors in India in a Trishanku-like situation (Trishanku was a king in Hindu mythology who was stuck between heaven and earth for perpetuity https://www.srichinmoylibrary.com/gim-183). They can neither earn capital gains from falling rates nor look forward to better accrual income from rising interest
What is the outlook for interest rates and debt funds? Read More »
A recent addendum by Aditya Birla Sun life suggested that investors rollover some of the AMC’s FMPs that are maturing. The reason was that given the low-rate scenario, investors are unlikely to get good interest rates outside once they exit. And that staying invested would provide indexation benefit for capital gains and earn higher returns.
But some investors raised the doubt on whether the FMPs under question were in trouble. We therefore looked at their portfolios. They had high-quality AAA-holdings are unlikely to have had any pressure on repayment. In other words, there does not appear any credit related rollover compulsion.
3 reasons why you should not rollover your FMPs now Read More »
Perpetual bonds have caused some sleepless nights for fund managers after SEBI’s circular earlier this month. On March 10th, SEBI issued a circular capping the debt scheme exposure to perpetual bonds at 10% and also laying down new rules how these bonds should be valued in debt scheme portfolios. We wrote a short take on it last week suggesting that you wait for clarity. SEBI has now come up with one more circular offering some clarification.
What to do if your MF holds perpetual bonds? Read More »
Debt funds are back to worrying many of you. Returns are dipping, there’s a lot of talk on yield movements both at home and in the US, there’s the question of where rates will head now. Over the course of the past several weeks, we have fielded several questions from you on what this means and what you should be doing with your debt funds.
We’ve written extensively on the developments in the debt space in different articles. But here’s answering the questions that appear to worry you the most.
Which debt funds to hold now and other questions, answered Read More »
Target maturity funds invest with a stated maturity and pay you back when the maturity is reached. You can call them an FMP but one that is open-ended and takes fresh inflows and outflows.
With yields beginning to move up, more funds are now beginning to talk about ‘roll down strategy’ or a strategy where a maturity date is fixed thereby ensuring that the portfolio’s average maturity steadily falls as it nears maturity. For example, a 2027 target date fund will have a 6-year maturity now and a 5-year maturity in 2022 and so on, until the maturity reduces to near zero in 2027.
2 target maturity government bond fund NFOs – Should you invest? Read More »
For those of you spooked by the continuing volatility in debt funds, our earlier article would have explained why these ups and downs prevail now. If you have money to be deployed or profits booked out of equities and waiting in the sidelines, you may hesitate to deploy it in this debt market condition.
To speak the truth, there are no categories other than overnight and liquid that are spared from the current volatility. However, if one looks at it on a relative basis, select funds from ultra-short, low duration and money market have held on, notwithstanding the see-saw.
Prime Recommendation: 2 Debt funds to limit current market volatility Read More »
Most of you are now comfortable with the fact that gilt funds can deliver negative returns in the short to medium term when rates move up. We have also written about it here. But the negative return prevalent in the past month or so, across most debt fund categories has troubled many of you.
Why your debt funds have negative returns and what to do Read More »
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