Don't chase only returns: Sebi to MFs on debt paper exposure

Cautioning mutual funds against investing in debt securities that could turn sour, The Securities and Exchange Board of India (Sebi) has told them they should not "chase only returns".

"One item that has been very active in debt component of the investment by mutual fund is the quality of portfolio. Sebi is fully cognizant of the need to prevent the risk beyond a manageable degree from seeping into the mutual fund industry," Sebi Whole Time Member S Raman said.

Sebi has already stepped up its vigil for mutual funds' exposure to distressed bonds amid growing concerns over rising bad debt levels of corporates.

Besides, it has come out with a stricter set of corporate debt exposure norms for MFs, wherein it has capped the investment limit in bonds of a single company.

"Our supervision has been pretty vigorous in the last six-month. I would like to assure that debt funds in the mutual fund industry are fine," he said.
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