debt funds

Every crisis reminds us that markets can swing like a pendulum between greed and fear. Fixed income offers comfort in those phases and does its job as a stabiliser.

Despite volatile markets, investors continued to pour money into mutual funds in April, with equity funds seeing Rs 38,440 crore in net inflows and debt funds experiencing a significant Rs 2.47 lakh crore. This marks the 62nd consecutive month of equity inflows, indicating a balanced, allocation-focused approach by investors seeking diversified strategies to navigate market fluctuations.

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If earning a market rate at a lower cost is your choice, you could opt for debt funds. But take the time to choose without being distracted by pitches about tax, exclusivity, superior strategy or regular dividend. If a debt fund charges an annual fee of half a percent, and lends in the same market as a bank which takes an annual 3% net interest margin, it is a better bet.

debt funds, also known as bond funds, are a type of investment fund that puts money into bonds, or other debt securities.

The government on Thursday set the stage for making more capital available for ports, power, road and airport projects through the infrastructure debt funds (IDFs).

Asset management companies have started offering banking debt funds to investors averse to taking credit risk on their investment portfolios. Investors have been showing interest in these funds, despite concerns of rising non-performing loans among public sector banks.

Rattled by the shock closure of some high-profile domestic funds investing in high-yielding debt, investors are quickly moving their cash into the safety of bank deposits. Bankers said that they have seen heavy inflows into their traditional deposit schemes after Franklin Templeton Mutual Fund said last week it was shutting down six credit funds.

In the last few months, as the Reserve Bank of India went on cutting rates, went on cutting rates, mostly surprising market players with mid-policy decisions on rates, debt funds with longer duration came into the limelight.

Banks and finance companies have been allowed to float infrastructure debt funds (IDF) under the mutual fund route.

From lower tax and higher liquidity to greater flexibility, there are several advantages that such funds provide

The sharp spike in bond yields after the RBI increased overnight lending rates has pushed long-term debt funds deep into the red. The recent fall has pulled down gains by almost half for these funds.

debt funds are still not in the preferred list because a debt fund is seen as a complicated product with a varying NAV and dividend compared with a simple debt product that returns the principal and pays interest.

A common refrain from mutual fund investors is that these investments are risky. Another is that they don't understand how mutual funds work and so do not want to invest in it.