A lot of people have invested in the NHAI bonds. They are said to be safe and the returns are tax-free. Are mutual funds affected by them in any way?
-Anonymous
No, mutual funds are not affected directly by NHAI bonds. However, indirectly mutual funds can be affected because the money that is not invested in NHAI bonds could eventually end up in funds.
It is possible that fixed income investors might have redeemed their fund units, even at high losses, and invested the money into NHAI bonds. These bonds had come out at the peak of the interest rate cycle and give out good returns that are tax-free, so they are extremely attractive to conservative investors who seek fixed returns at low risks.
This article was originally published on January 09, 2012.
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