Mumbai, June 17 : Leading rating agency Crisil has said that investment in Debt Mutual Funds was advisable and may benefit investors.
The statement of Crisil comes close on the heels of Franklin Templeton closing down schemes after Coronavirus outbreak.
Crisil of the view that investments in Debt Mutual Funds would be a wise thing to do but one needs to know how to invest their money into it.
Early this year, Franklin Templeton closed down its schemes citing market conditions and said it was committed to pay unit holders over time thereby triggering off great concern among the investors.
“……things are not all bad. Indeed, dive a little deeper and there are streaks of silver — options among various categories of debt mutual funds that can help ride over the challenges being posed by the pandemic’s economic crisis,” Crisil said in a note.
Crisil pointed out that the markets are down by 21 per cent since January this year and also debts markets also have not been spared as over Rs 1.94 lakh crores of outflows were recorded in March and the assets under Management came down 18 per cent to Rs 22.26 lakh crore.
“Moreover, recent defaults, sectoral slowdown and closing down of Mutual Funds Schemes had their impact on the Debt Mutual Fund Industry”, Crisil said in the note.
Despite this, Crisil said, the panic felt within the Debt funds market, Mutual Funds are “able debt investment vehicle” and the agency suggested factors to be looked into to ensure better returns while investing basis an analysis, the rating agency added.
Crisil said that within a category there is a variation in schemes faring differently across various risk assessment parameters. There are still good choices available in each fund category.
It becomes necessary for the investors to follow proper review/monitoring mechanisms to help avoid the risk associated with bad choices, said Crisil adding that it would be wise to chose quality funds carefully and look for the “warning bells”.
For the debt mutual funds the situation is going back to normal with investment inflows into safer avenues like government securities, state-run Enterprises and public sector undertakings, the agency opined.
The pandemic appears to have gripped the industry and therefore the investors have to look carefully and cautiously at their portfolios, spot the warning signs and act swiftly.
Investors who are looking at Debt Mutual Funds investments should take into account credit profiling, liquidity profiling, diversification of profile and sector profiling as these will benefit them, Crisil added.
