As debt funds land in trouble following multiple defaults and downgrades by bond issuers, ET Wealth addresses some key questions from worried investors.
1. Why are debt funds in bad shape?
Trouble started with the IL&FS fiasco, where a default and subsequent rating downgrade adversely affected several mutual funds holding its bonds. The problem has now spread to other entities such as DHFL, Essel Group, Yes Bank and Reliance Anil Dhirubhai Ambani Group.