One topic we keep talking about on the podcast is debt funds. As we've alluded to numerous times in the show, most investors focus too much on the equity part of their portfolio and ignore the debt part. They often take debt for granted and invest based on recommendations or based on whatever partial understanding they have. This often ends up backfiring whenever there are bad phases in the debt markets like the IL&FS, DHFL, and Franklin episodes.
The other risk that investors don't pay much attention to is the interest rate risk. Rising interest rates are bad for debt funds, and falling rates are good for debt funds. Given the strong inflationary pressures, RBI has hiked interest twice over the last month, and that has led to the debt fund NAVs falling. Predictably, over the last 3 odd months, the most common query from mutual fund investors was, “why are my debt fund NAVs falling?.”
So we caught up with Mahendra Jajoo, the CIO of Fixed income Mirae Asset India. In this conversation, Mahendra talks about:
Hoep you find this useful.