Corporate bond funds: High credit quality, moderate duration risk

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Larger funds, with higher AUM, are less impacted by redemption pressures.“A higher AUM gives fund managers more bargaining power with debt issuers, leading to better returns,” says Misra.

Fund managers have the flexibility to alter duration depending on the interest-rate outlook.“During a rate hiking cycle, they lower the duration to around one to two years, while in a falling rate regime, they increase the portfolio duration to 4-6 years,” says Shah.

Sen recommends a 40 per cent exposure to corporate bond funds in debt fund portfolios and a three to four-year horizon.

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Article Details

Category: BusinessFinance

Markets: India

Topics: Personal Finance Finance Sebi Corporate bond funds

Source Website Secure: Yes (HTTPS)

News Sentiment: Neutral

Fact Checked: Legitimate

Article Type: News Report

Published On: 2024-10-16 @ 20:14:26 (8 hours ago)

News Timezone: GMT +5:00

News Source URL: business-standard.com

Language: English

Article Length: 613 words

Reading Time: 4 minutes read

Sentences: 26 lines

Sentence Length: 24 words per sentence (average)

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Copyright Owner: © Business Standard

News ID: 23089993

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