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Debt funds turn to safe havens for investors as defaults sting, shows data

Since the IL&FS crisis, allocation to govt papers more than doubles, exposure to NBFCs drops

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Since September 2018, the debt fund industry has come under tremendous pressure when companies started defaulting on a regular basis

Joydeep Ghosh New Delhi

3 min read Last Updated : Jul 27 2020 | 6:04 AM IST

In the past 22 months, since the Rs 99,000-crore default by Infrastructure Leasing and Financial Services (IL&FS), debt fund managers earning high returns for investors by taking credit risk have mellowed down substantially.

Latest numbers from the mutual fund industry show that they are investing much more in safe instruments like G-Secs, PSU debt, T-bills, and others. For example, industry’s total allocation to G-Secs, PSU debt, and T-bills stood at 17.4 per cent in August 2018, and at the end of June 2020, it had more than doubled to 37.3 per cent. The data also reveals that during the same

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