Shift balance of debt funds in favour of higher credit-quality portfolios

Steps to improve liquidity may mitigate credit risk. Nonetheless, avoid lower-rated portfolios

Sanjay Kumar Singh 

In the second bi-monthly monetary policy for 2019-20, the Reserve Bank of India (RBI) cut the repo rate from 6 per cent to 5.75 per cent. This was its third consecutive rate cut. The central bank also changed its policy stance from neutral to accommodative.

All this is good news for debt fund investors whose investments have taken several knocks in recent months due to a series of credit defaults and downgrades. Several factors prompted the repo rate cut. “Both GDP growth and industrial production numbers have been weak. Other indicators of growth have also softened over the past ...

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First Published: Fri, June 07 2019. 00:09 IST