Credit Risk Funds

The investments will support BRV Group's 4.7-acre Vasundhara project and KW Group's 1.5-acre Indirapuram development as ASK expands in established NCR markets

YTMs of all debt fund categories, except credit risk and overnight, in a narrow range of 6.3-7.3%

10 out of 16 schemes have delivered below 6% returns in one year; Category AUM still a fraction of pre-pandemic level

The past few months have seen several debt fund categories delivering subdued returns because of the spike in bond yields.

Credit risk funds are showing a category average return of 13.2 per cent for the past year

After witnessing sharp outflows in 2020, credit risk funds are once again back on investor radar

Given their high-risk nature, take limited exposure in your satellite portfolio

This is thanks to economic revival, improving upgrades to downgrades ratio, say experts

'Extraordinary scenario' say experts as both, short and long-duration funds give low returns

Go with a fund manager who negotiated the past 5 years without default or downgrade

Yet these schemes have run out of investors' favour since April 2020, especially after the Franklin Templeton episode

The fund maintained modified duration in the range of 1.7 years to 3.7 years during the past 3 years, averaging 3 years

Debt schemes take significant exposure in not-so-highly rated companies and had lost their appeal after April 2019

In a Q&A, N S Venkatesh says there are enough inefficiencies in the market right now, which will help fund managers generate alpha over the index

Offer significant spread over 'AAA' corporate bond funds over 3-yr period

Investors should observe a few precautions, despite the likely higher returns

Credit risk funds usually fetch between 1.5 per cent and 1.9 per cent expense ratio, depending on the fund house and size of the scheme

Shrinking asset size has added to challenges in bringing down levels of such investments

Fear of worsening credit profile, economic uncertainty, trigger investor exits

Market-linked debentures and credit risk funds - two products to have grown popular in the past two years - have fallen out of favour since the outbreak