Investing in Debt Funds

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Investing in Debt Funds
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Reality Check

• Are Debt Funds Risky?
• Yes
• Can the Risk be minimised?
• Yes

3
Investor Discipline

• Quantify your risk appetite based on Investment
  Time Horizon
• Choose a Fund based on Risk and not Return
• Be patient - stick to your time horizon

4
Debt Market Characteristics

• Rewards discipline
• Losses and Gains are inextricably linked
• Loss of principal over longer periods extremely
  unlikely

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Debt Market Returns
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Debt Market Returns
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Debt Market Risk Mitigation
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Debt Market Risk Mitigation
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Minimising Risks

• Choose a Fund which takes it's responsibilities
  seriously
• How do I judge that?
• Effort invested in analysing credit
• DFI Exposure
• Finance Co. Exposure
• Exposure to issuers like IRFC, PFC, Etc.
• Effort invested in analysing the economy

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Minimising Risks

• Take your investments seriously
• What does that mean?
• Choose a fund with care and with an investment
  horizon in mind!
• Investment for a few days - Liquid Funds
• Investment for a few weeks - Short Term Funds
  (General Debt or Gilt)
• Investment for a few months - Income Funds or
  Gilt Long Term Funds

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Significance of Exit Loads

• Load periods convey the funds portfolio
  structuring to the investor
• The period over which an investor can be
  reasonably sure of Capital Preservation

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Questions?
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Thank You