News From Press Banking & PSU and corporate bond mutual funds score high on credit quality. But are they risk-free?

Banking & PSU and corporate bond mutual funds score high on credit quality. But are they risk-free?

Banking & PSU debt funds are required to invest 80% in instruments issued by commercial banks and public financial institutions. Corporate bond funds are also required to put at least 80% in AA+ and higher-rated corporate bonds. Does that make them risk-free?

ET Jun 22, 2020

Alarmed by recent blow-ups in debt funds, investors have been flocking to the relative safety of banking & PSU funds and corporate bond funds. Armed with AAA-heavy portfolios, these provide some comfort about credit quality. However, you still need to look under the hood of each fund for presence of other risks. Credit risks in these funds are mostly.

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