In the past couple of years, debt fund investors have found themselves in sudden and deep trouble when credit rating agencies (CRAs) have made abrupt multi-notch downgrades of companies. Investors in Franklin Templeton Mutual Fund’s debt funds, for example, saw a sharp erosion in the net asset values (NAVs) due to the fund house’s exposure to Jindal Steel and Power (JSPL)’s bonds. The bonds of JSPL saw sharp downgrades in less than two weeks’ — from AA- to BB+, and then, to D.
Domestic funds splash $1 billion/day on shares in dip-buying spree
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