Mutual Funds are Investing in Debt Instruments Now
With equity markets in the doldrums, mutual funds are increasingly turning to debt instruments. Several mutual funds have diverted a large portion of their portfolios into debt schemes in the past few months.
The debt portion of assets under management of the mutual funds industry increased by around 25 per cent by May-end from January 2008, while the share of equity fell by 14 per cent.
The equity portion of the assets under management of mutual funds dropped to Rs 189,958 crore in May 2008 from Rs 219,367 crore in December 2007. The portion of hybrid schemes (which has a large percentage of equity) also fell by around 20 per cent during the same time.
The debt portion of the asset base has increased by around 25 per cent in the past five months, in which the share of medium-term funds and gilt funds etc has gone up by more than 50 per cent, while the cash portion which generally includes liquid funds, floating rate funds and Fixed Maturity Plans (FMPs) amongst others, grew by around 22 per cent.
The total debt portion of the mutual funds asset base has gone up to Rs 381,373 crore in May from Rs 306,786 crore in December.
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Hey,good analysis on mutual funds.