The Hindu Business Line : Fund houses shift focus to debt schemes

Certain categories of debt funds will be in focus in the coming months, mutual fund circles indicate, adding that the emerging trend should provide a respite from the current scenario dominated chiefly by liquid and other shorter term schemes.

Fund houses, also aware that most clients will not for long be content just with fixed-maturity plans , which are ubiquitous these days, are planning to push debt schemes that will deliver the most in an era marked by at least one major shift - changing interest rates.

"We are possibly moving towards a situation where investors will start considering higher exposure to debt, taking advantage of conditions that are expected to set in," says Mr Raghvendra Nath, who heads strategy at Birla MF.

In that context, some debt products, which are currently not in fashion, are expected to start gaining prominence, he said.

The comment may be seen in view of the realities that most categories of debt funds have faced in the recent past. The ordinary investor has largely stayed focused on equities, which have provided good returns in the last three years or so. The one-year performance table for debt, as worked out by Value Research, suggests that 6.02 per cent was the best show turned in as on August 14. Incidentally, medium- and long-term gilt funds delivered 3.15 per cent lower than what was provided by savings accounts with banks.

Mr Vikaas M. Sachdeva, Country Head - Business Development, ING Vysya MF, feels that prospects for debt will generally turn for the better even as clients appreciate the importance of spreading risk over various classes of asset.

"That sort of change is quite likely. Investors who are foreseeing it today will stand to gain if they correctly modify their asset allocation," he observed.

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