Close on the heels of the Amtek Auto episode, the credit rating downgrade of JSPL indicates that credit opportunities funds may yet be treading on thin ice. Experts reckon that more pain could be in the offing as India Inc's credit profile continues to show deterioration. Many insist that investors not get too comfortable with credit opportunities funds, even though the category as a whole continues to dominate the performance charts within the debt fund arena.
These funds generate returns from interest accrual, typically investing in higher yielding but lower rated corporate bonds. These also seek opportunities for upgrade in credit rating of underlying securities, which can lead to price appreciation in the same.
Active mid, small-cap funds look smart in this market correction
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