In the past 2 years, debt funds have faced interest rate and credit risks. The latest was the fall in Taurus Asset Management’s debt schemes’ net asset values due to a downgrade in one holding. Should retail investors avoid debt funds and look at mutual funds only for equity allocation?
Kunal Valia, director, Credit Suisse Securities India
Debt funds should be considered as essential building blocks of fixed income asset allocation as they are complimentary to other fixed income products like bank or post office fixed deposits and Public Provident Fund (PPF). Debt funds offer a wide risk-return spectrum all the way from liquid funds to short-term debt funds to credit funds, to match varying investor risk appetites and investment horizons.
