I have invested in debt funds which have nil or negligible investment in government securities. What will be the impact on the returns now after so many rate cuts. Also, are the investments safe? What are the chances of Amtek like incidents happen again?
- Rajan
You haven't given details of your investments in debt schemes. So we will offer you a general comment. Rate cuts and likely rate cuts are considered good for debt mutual funds, especially for long-term debt schemes. The NAV of these schemes gain the most when there is a rate cut.
Investments in debt schemes are not absolutely safe because their performance is linked to the performance of the debt market. However, they are relatively safe.
There is no way one can predict what will unfold in the market in the coming days.
This article was originally published on November 06, 2015.
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