Select a credit risk fund that avoided mishap in recent past: Analysts

Given their high-risk nature, take limited exposure in your satellite portfolio

With an average return of 9.4 per cent, credit risk funds have outperformed all others over the past year. However, instead of rushing in to invest in the fund from this category that has given the highest return, investors need to do some due diligence.

One-time gains driving up returns

A few funds, with returns as high as 13-22 per cent, have pulled up the category average.

“Many credit risk funds have seen defaults in the past few years. They had marked down the value of those bonds to zero. Some of them have recovered a part of their money from those papers.