When IL&FS defaulted on debt repayment a few months ago, debt funds holding the company’s securities took a hit that wiped off a chunk of the gains they had made during the year. The episode prompted the regulator to take a relook at the category. To safeguard investor interest, debt funds will now be allowed to segregate troubled assets from the rest of the portfolio, also referred to as ‘side-pocketing’. To what extent will this safety measure solve the ills plaguing such funds?
..
