Published Article Details

5 smart things to know about key portfolio attributes of a debt mutual fund

Posted by: Labdhi Mehta on Aug 07, 2017, 01.23 PM IST

1. Allocation to instruments should be in line with fund's investment objective. Liquid & shortterm debt funds should have higher proportion of shorter maturity instruments as compared to longer duration funds.

2. Fund holdings classified according to credit ratings. Funds with high exposure to top rated papers have lower credit risk and higher credit quality. Find out if there is exposure to lower rated papers to boost performance.

3. Average maturity is average time involved in maturing all debt securities in the portfolio. Income & gilts have higher average maturity than shorter term funds. Dynamic bond funds have changing average maturity.

4 . Modified duration which basically implies interest rate risk and gilts and income funds usually have higher duration than shorter maturity debt funds.

5 . Yield to maturity (YTM) broadly indicates the total returns investor will earn from interest payment and annualised gains or losses from bonds, if held until maturity.


(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.) This article appeared in Economic Times dated Aug 07, 2017, 01.23 PM IST

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