PRC matrix: Useful tool for investors choosing debt fund, say analysts

Utilise alongside risk-o-meter to know current, potential risk

The Franklin Templeton debt fund debacle may have a positive long-term fallout as the Securities and Exchange Board of India (Sebi) has further tightened the regulatory framework for such funds.

Thus far, fund houses informed their investors of the risk in their current debt fund portfolios via the risk-o-meter. Through a circular dated June 7, the regulator has introduced the Potential Risk Class (PRC) matrix, which will inform the investor about the maximum risk a fund manager can take in a debt fund she plans to invest in.  

Lacunae in earlier framework

Sebi’s October 6, 2017, circular on “categorisation and rationalisation of mutual