What debt funds are NOT? (Morningstar)

Recently, my thoughts on debt funds were published on Morningstar (India) again. In this one, I try to clear the air about debt mutual funds by laying to rest the 4 common misconceptions people have

So if you are a debt fund investor, then you might like to read this one too about What debt funds are NOT?

Here is the link to the original article with the same title.

I have already written a detailed note on How to Pick Debt funds? which was quite well received by everyone.

Sometime back, I was also quoted by Morningstar in a thought note documenting how Investment Advisors are navigating the debt fund space (link).

Debt funds have been in news lately. In spite of the potential for delivering higher tax-efficient returns (due to indexation in debt fund taxation), investors need to pick debt fund very carefully.

In fact, I also feel that on-going events have made it very clear that there will be very soon a Categorization 2.0 of Debt Funds by SEBI to clean up the risk-related definitions and more importantly, make the debt fund categorization more robust, useful and easy-to-understand for the common investors. I hope it happens as it is the need of the hour.

Now it might sound repetitive but debt funds need to be carefully picked. If you are unable to evaluate debt funds from all the vantage points discussed above and earlier too, it would be wise to take professional advice. Avoid picking debt funds randomly or (wrongly) based solely on past performance or guesswork.

Leave a Reply