I keep hearing that debt funds perform better when equity markets dip. So, should I move my equity investments to debt?
- Deepak Jain
There is no direct relation between the performance of equity and debt funds. The investment objective of both the fund types is different. Equity mutual funds depend on the stock market performance, whereas debt funds depend primarily on the interest rate movement.
Since both the asset classes are affected by different factors, both asset classes may not rise or fall together or have inverse relation.
It will be better if you stick to your asset allocation based on the debt and equity allocation and stick to it than make wild swings based on market movements.
This article was originally published on January 24, 2011.
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