‘Debt Funds Work Best When Aligned With Individual Goals’

In a compelling episode of an Outlook Money Webinar series on mutual funds, Shrinivas Khanolkar, Head of Products Marketing and Corporate Communication at Mirae Asset Investment Managers India provided invaluable insights on debt funds and long duration funds. The detailed discussion, hosted by Ridhima Bhatnagar, highlighted the investment strategies that can help these funds perform to their potential and help in the process of portfolio diversification. Here are the highlights from the conversation:

Khanolkar opened the conversation by highlighting that India’s economic trajectory, noting that despite global uncertainties, India continues to exhibit robust growth, and that is positive for Indian investors.

Debt Funds: More Than FDs

When asked whether debt funds are comparable to fixed deposits (FDs), Khanolkar clarified: “The comparison isn’t entirely fair. Debt funds need to be evaluated alongside other debt instruments, not equity or FDs. They offer a diversified risk-reward profile, while often outperforming traditional deposits in returns.”

He emphasised the importance of understanding risk appetite, investment goals, and time horizon when considering debt funds. Khanolkar explained: “Debt funds work best when aligned with an investor’s financial objectives. The structure and maturity durations of these funds cater to both conservative and moderately aggressive investors.”

Long Duration Funds: A Strategic Tool

Turning the discussion to long duration funds (LDFs), Khanolkar explained their relevance: “LDFs are ideal for investors with a long-term outlook, offering opportunities in declining interest rate environments. However, they require patience and a clear understanding of associated risks.”

He advised against common pitfalls like trying to time the market or expecting equity-like returns from LDFs. Instead, he encouraged investors to adopt a research-driven approach.

“It’s essential to match your investment horizon with the fund’s duration and avoid short-term exits. A well-thought-out investment strategy is key to leveraging the benefits of LDFs,” he said.

Key Takeaways for Investors

• Assess Your Risk Appetite: Understand how much volatility you can tolerate and choose funds accordingly.

• Avoid Timing the Market: Stay focused on long-term goals rather than short-term gains.

• Diversify Wisely: Balance your portfolio with both short- and long-duration instruments to mitigate risks.

Wrapping up, Khanolkar reiterated the importance of thorough research and consulting financial advisors when navigating the complex yet rewarding world of debt and long-duration funds.

To view the entire webinar, please visit: www.outlookmoney.com

Disclaimer: An Investor Education and Awareness Initiative by Mirae Asset Mutual Fund . All Mutual Fund investors have to go through a one-time KYC (Know Your Customer) process. Investors should deal only with Registered Mutual Funds (RMF). For further information on KYC, RMFs and procedure to lodge a complaint in case of any grievance, you may refer the Knowledge Center section available on the website of Mirae Asset Mutual Fund.