The Covid-19 pandemic has thrown capital markets into a tailspin. The state of the underlying asset classes has left even mutual fund investors edgy. Hold on or let go? Invest more or redeem? The questions are flying thick and fast, especially after the recent shutdown of a few debt mutual fund schemes of a leading fund house.

A Crisil analysis, however, shows things aren’t all bad. Indeed, dive a little deeper and there are streaks of silver – options among various categories of debt mutual funds that can help ride over the challenges being posed by the pandemic's economic blow.

The need of the hour is adroit risk management. 

An investor needs to first understand the risks involved in debt mutual funds to be able to select a good one, for even schemes within the same category can fare differently on different risk parameters. And once invested, he or she needs to follow proper review/ monitoring to avoid the pitfalls. In short, one needs to choose quality funds carefully and keep an ear out for the warning bells.

This report showcases the portfolio risk factors Crisil Mutual Fund Ranking (CMFR) tracks – including those of credit quality, liquidity and concentration. It also evaluates and sector level risks in the debt portfolio using Crisil’s proprietary models such as the Industry Risk Score (IRS).

Happy investing!