Debt funds have witnessed a huge outflow in September. Should investors be worried?
The volatility at the equity markets is a well-known fact and there are phases when it might underperform. During such uncertain times, it is necessary to park some funds in debt products. Debt mutual funds primarily invest in fixed income instruments like government securities, bonds, treasury bills and money market instruments. They are best suited for the investors who do not want to take chances by investing in a highly volatile equity market. But what happens when the debt funds themselves go through myriad uncertainties?
The mutual fund industry’s asset under management (AUM) stood at 22.04 lakh crore (trillion) in September, a dip of 12.5 per cent against the AUM of 25.20 lakh crore in August. The debt funds for September saw the outflows of 2,44,522 crore.
Rahul Singh, Fund Manager (Fixed Income), LIC Mutual Fund Asset Management, said “Outflow was triggered mostly due to three reasons - default by infrastructure finance company IL&FS, negative interest rate views and liquidity issues in non-banking finance corporation (NBFC) and housing finance sector.
Let’s take a look at how the prevailing scenario is impacting the investors, and what should they do in a volatile time ahead, which is expected to stay for a longer period than anticipated.
Domino Effect
A recent shocking default over asset-liability mismatches at IL&FS led to panic in the Indian financial sector. The investors are worried about its impact on the credit market as well as on other NBFC’s.
Mahendra Kumar Jajoo, Head (Fixed Income), Mirae Asset Global Investments (India), said, “Mutual funds provide the safest and fastest exit of all options and therefore it’s no surprise that panicked investors rushed out of debt mutual funds.”
Esta historia es de la edición November 2018 de Outlook Money.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición November 2018 de Outlook Money.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor? Conectar
The Future Of Credit Card Usage
Credit card usage is increasing in India, but it's prudent to manage credit wisely
Liquidity Coverage Ratio Framework
At the recent monetary policy committee meeting in April 2024, Reserve Bank of India (RBI) Governor Shaktikanta Das proposed changes in the liquidity coverage ratio (LCR) framework to successfully meet liquidity risk.
STRATEGIES TO HELP YOU STAY ABROAD AFTER STUDIES
More Indians are now going abroad for higher studies with plans to stay and work. But living costs, the lack of job opportunities and the burden of education loans could often pose a problem. Assess the opportunities and be practical before making such a decision
FROM SAVINGS TO SECURITY: HOW INDIANS ARE PREPARING FOR THEIR SUNSET YEARS
The Outlook Money - Toluna Retirement Survey conducted in December-end 2023 threw light on how Indians plan and save for retirement. A growing number of Indians now understand the necessity of retirement planning, and want to enjoy their retirement years with kith and kin
Here's How To Install A Solar Panel
It is the season of solar panel subsidy announcements. Right after the Centre launched the PM Surya Ghar Muft Bijli Yojana to offer subsidies to 10 million households to set up rooftop solar systems, the Delhi government has announced an extra capital subsidy of ₹2,000 per kilowatt (kW) to Delhi residents for rooftop solar panel installation. Both governments have caps on subsidies. Some other states, too, offer incentives on the use of solar rooftop panels.
Master Your Own Money Choices
Instead of judging others, have clarity about what you want from your money, where you want to spend it and how you want to feel about it
3 THINGS TO CHECK BEFORE YOU EXIT YOUR POLICY
If you think that the insurance policy you bought doesn't quite align with your goals, you may surrender it. But that comes at a cost. Here's why you should do the calculations
Small And Mid Cap Rally: Be Wary
You may include small- and mid-caps in your portfolio for diversification, but understand that they may not replicate last year's returns and are relatively more volatile
HOW TO MAKE SENSE OF THE GOLD RUSH?
The precious metal has been on an upward rally for the last couple of years due to factors as diverse as geopolitical conflicts, bulk buying by central banks, and hope of rate cuts, of late. The key, therefore, is to invest in gold in a staggered manner
'People Are Normal. They Are Sometimes Ignorant But They Are Not Stupid'
Meir Statman, the Glenn Klimek Professor of Finance, Leavey School of Business, Santa Clara University, California, is the second generation of behavioural finance experts who refused to label people as \"irrational\" and instead called them \"normal\". In his latest book, A Wealth of Well-Being: A Holistic Approach to Behavioral Finance, he expands the circle of finance to include life well-being and shows how they are inextricably intertwined. As part of an interview series, 'Wealth Wizards: Money Maestros in conversation with Nidhi Sinha, Editor, Outlook Money', Statman spoke about his research, and explained concepts through anecdotes that can help you take balanced decisions. Edited excerpts:
