Since mid-June, Indian debt fund investors have gone through a severe shock therapy. They’ve had a sudden dose of losses that they had no reason to expect and what’s worse, it’s clear that this is not a one off event. Smart debt fund investors should recognise that the game has changed permanently--there’s now a whole new source of uncertainty in the returns of these funds which is not going away. A lot of the recent exodus has also to do with a fast depreciating rupee.
For several years now, one of the main determining factors for the strength of the Indian rupee against other major currencies was the foreign flows into the equity market. However, the same is changing fast. Thanks to the government's recent decisions to hike Foreign Institutional Investors (FIIs) limits in the debt market, foreign funds are suddenly very active in that segment of the market. As a result of the government’s relaxed limits, FIIs have quietly become powerful. As last month’s events show, a mass exit can cause sudden, unexpected losses in what investors thought was a stable category.
This month's Mutual Fund Insight cover story tells you how one should realign the strategy to save oneself from the fallout of these events.
The Fund Radar section has stories on fewer equity funds being launched and how the new colour coding of funds still has a few red flags.
This issue also has an interview with Chandresh Nigam, Managing Director and CEO, Axis Mutual Fund. He tells us why rupee stability is key to equity gains.
The issue has all the special features -- Fund Radar, Buy Sell Hold, The Plan and the comprehensive Mutual Fund Scorecard. And exclusive columns -- First Page by Dhirendra Kumar, Econology by Jay Dubashi and Economic Viewpoint by Paranjoy Guha Thakurta.
the July-August issue of Mutual Fund Insight now.
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