While SIPs are being increasingly used for investment in
equity schemes, the compelling case for an SIP continues for investment even in debt schemes, provided that the same is carried out regularly and for a horizon which transcends over a medium/long period of time, says Debasish Mallick, managing director & CEO of IDBI Mutual Fund in an interview to FEs Saikat Neogi.
In the past couple of years, mutual funds have been promoting opportunities in debt among retail investors. But after July 16 when the interest rate was reversed by the RBI, investors incurred huge losses and their confidence was shaken. Do you think that confidence is returning back now?
Debt schemes of mutual funds have traditionally been an investment opportunity pursued by the institutional and high net worth (HNI) investors only. Except for some participation in fixed maturity plans (FMPs), retail investors have not been active in debt fund schemes. With emerging opportunities in the debt market, particularly by way of expected rate cut, mutual funds have been promoting debt schemes as an investment option for retail investors. There are indeed very attractive opportunities in mutual fund debt schemes for retail investors, starting from overnight investment in liquid funds to duration debt products like, gilt funds, income fund, dynamic bond funds, etc.
Such opportunities can be pursued with small amount of investment also.
With continuous effort on the part of the mutual fund houses, retail investors have started to warm up to the idea of investing in debt schemes. Investments have started coming in, not yet in large numbers and amounts, but encouraging trends were definitely visible. The policy changes initiated on July 16 have brought in quite a change in the market and perception about debt products, at least for the time being. The adverse currency movement has no doubt abated, the macro expectations in terms of current account deficit and core sector IIP numbers are today definitely looking better. There is hope and expectation of an economic turnaround. However, with persistent inflation, the expectation of rate cut appears to have receded.
The duration debt products will now have to wait for their turn, and retail investors may not like to take active position in such products. Liquid funds and FMPs definitely continue to present attractive investment opportunities. Retail investors can actively look at these products as a low risk and attractive investment option in debt schemes. Investors can