What are Credit Opportunities Funds?

Are you an investor of Debt Mutual Funds? If so, then you might have heard about the credit risk. However, you may surprise with an idea of how such credit risk be utilized by debt mutual funds. These Credit Opportunities Funds are new types of funds, which utilize the credit opportunity.

Credit Opportunity Fund

Before proceeding further, let us first understand a few basics of Debt Funds or Bond Market.

Bond Price Vs Interest Rate

Let us say currently SBI Bank offering you the FD at a 9% interest. If someone offers you a bond, which gives you a yearly coupon of 10%, then you definitely look forward to buy this bond rather than FD. Therefore, when many will chase to buy the bond, which is offering a 10% coupon, then definitely the price of a bond will increase.

This is the effect of interest movement on bond price. Higher the interest rate means lower the bond and vice versa.

Bond Yield

Yield is a measure of interest income generated by a bond. The formula to calculate a Yield is as below.

Yield=Coupon Amount/Bond Price.

Let us say you are holding a bond with a price at Rs.100 and giving you an annual coupon of Rs.10. In this case, the yields will 10%. Let us say, due to an increase in interest rate, the bond price decreased to Rs.90 then the yield will be increased by 11.11%. At the same time, let us say, due to fall in an interest rate, the bond price increased to Rs.110 then the yield will be Rs.9.09%

Which is profitable for you? Investing Rs.100 bond and getting a coupon of Rs.10 or investing in Rs.90 bond and getting the same coupon of Rs.10? Obviously the Rs.90 bond. Hence, lower the bond price means higher the yield and vice versa. You notice that a bond price is inversely proportional to yield.

For bond funds, the weighted average of a portfolio of bond yield is calculated. This is called as yield to maturity. Yield to maturity is an expected yield, which you receive if you hold the bonds in the portfolio until maturity.

Modified Duration

This is a measurement of bond’s sensitivity to interest rate movement. It is measured in years. Let us say, the modified duration of a bond or bond fund is 5 years, then for any interest rate movement of 1% the bond price or NAV of a bond fund will move to 5%. The longer the modified duration, higher the sensitivity to interest rate movement. Hence, you have to choose the lower modified duration bond or fund.

Average Maturity

As the name indicates, it provides you an average maturity of all bonds held in a portfolio of funds. Higher the average maturity means the higher the risk of interest. Therefore, you have to look at underlying bond fund average maturity before going for investing.

Accrual strategy of Fund (Credit Risk Strategy)

The major intention of such funds is to provide a better return. They usually not bother about the interest rate cycle. However, they try to provide you had better return by holding low duration and low-rated corporate bonds. Along with that, they may generate higher yield if the corporate bond rating goes up and ultimately that effect in an increase in the price of a corporate bond. Overall resulting in higher yield.

Therefore, in accrual strategy, the fund manager will try to provide a better return by indulging in buying of corporate bonds (which may be low in credit rating). Here the intention is clear; to hold the bonds, which provide high yield irrespective of credit rating. However, there is a risk of default due to low credit rating.

Duration Strategy of Fund (Interest Rate Risk Strategy)

If a fund manager takes a duration strategy based on interest risk, then such strategy is known as duration strategy. For example, if an interest rate drops then the fund manager tries to hold long maturity bonds and at the same time if an interest rate raises, then he adjusts to short-term maturity bonds.

Therefore, they increase the duration if the interest rate falls and do vice-versa when interest rate rises.

What are credit opportunities funds?

They are Debt Mutual Funds. Credit opportunities funds adopt the accrual strategy to provide the better return. They take the credit risk for the sake of generating high yield. Usually, they invest in low credit rated funds like less than “AA” rated. Lower the credit rate leads to higher the return. Because the risk of default also increases.

Here you will find two types of opportunities for a fund manager to provide better returns. One is holding the low-rated corporate bonds. The second is, if a company performs well then the same credit rating agency may grade it higher. In such a situation, the price appreciation will definitely effect into a better return from such funds.

Ideally, fund managers not only look for a current credit rating, but also at the health of a company. If the company has a huge opportunity to grow, then it turns to be the best choice for a fund manager.

Whether it is best to hold such funds?

Why we all hold debt funds? The main idea is to cushion the risk of what we have already in equity investment by diversifying properly. Therefore, I do not think it is good to hold such funds and borne more risk. The risk I have in equity is enough and no more risk from debt funds too. Hence, I stick to short-term goals than any such type of experimental strategy.

Few Credit Opportunities Funds in India

  • Franklin India Short Term Income Plan.
  • Religare Invesco Credit Opp Fund.

You may find the list HERE.

I am not recommending any funds. Because for two reasons. One as I said, I look forward to debt fund for cushioning my risk of equity and as a tool of diversification. Second, it is risky when compared to short-term bond funds as such credit opportunities funds primarily hold corporate bond which are low in credit rating. My basic idea is to share about such type of funds.

71 Comments

  1. Hi Basu,

    I have two queries : 1. I have chosen Franklin Templeton Low duration fund Direct Growth .
    Is this fund credit opportunities fund?
    2. All my funds, i have chosen to invest through SIP , Is that redemption period applicable all SIP’s ?
    I mean the above fund redemption period 3 months , shall i redemptive after 3 moths without any redemption charges . My question remaining 1 sip completed 3 moths ,other two sip also need to complete 3 moths periode

    Please clarify

    Regards
    Chandu

    Reply
    • Deear Chandu,

      1) It is a short term income fund with an average maturity of the portfolio is around 1.7 Yrs.
      2) Each SIP units has to complete 3 months to avoid exit load (in your example).

      Reply
  2. Hi Basu,

    Thank you for yet another informative and interesting read!

    I’ve been following your articles for a while now and I couldn’t find a way to subscribe to your website in order to receive an email (or some notification) whenever you post a new article. Kindly help me out if there is any way to do so.

    If you don’t mind, I want an advice from you..
    I’d like to make an investment of 50k – 60k for a period of one year. I’ve low to moderate risk tolerance hence I’d expect a return of 8 – 12 %. Kindly suggest which investment tool should I go for?

    I’m 24 Y/O and currently, I’m invested in the following SIPs:
    DSP BR Micro Cap Fund: 4000 (since past 15 months)
    Axis Long Term Equity: 1500 (since past 15 months)
    Aditya Birla Sun Life MIP II -Wealth 25 Plan: 1500 (since past 2 months)
    HDFC Balanced Fund – Direct Plan: 1500 (since past 2 months)
    L&T Value Fund: 1000 (since 15 months)
    Total = 9.5K

    I started out with all the SIPs with no real goal in mind but just to start saving at an young age. Also, SIP period for all is 5 years and invested directly through Mutual Finds Utility.
    But in one year or so I need to reach a goal of INR 2 Lakhs as I’ve some commitment.
    As I’ve approx 1 Lakh in my bank account, I’d like to give exposure of app 60K to a low risk investment for a period 1 year and get a return of 8 to 12% (or atleast close tot that)

    Please suggest an appropriate tool or fund in order to achieve my goal.
    Your input for my mutual find portfolio will be highly valuable as well ?

    Thanks in advance!

    Kind Regards,
    Rahul

    Reply
  3. hi sir, with RBI’s recent rate, and falling interest rate scenario, most of the fund managers are reducing the portfolio holding in Duration strategy and asked their client to increase the percentage in funds following Accrual Strategy . As you said, I am also looking at Debt fund only for my portfolio diversification.
    Also, should I follow the SIP route or invest, say an years SIP as Lumpsum? I believve with Debt funds, it is better to do lumpsum.
    please advice

    Reply
    • Yavika-Without knowing the reason or your financial goals, it is hard for me to guide anything.

      Reply
      • My immediate goal is 5yrs away, my son’s education. I have monthly SIPs of around 1 lakh(80%eq and 20% debt) I have already invested 80% in Equity and my agent suggested 20% SIP in BSL dynamic bond fund for debt portfolio, which I have not yet started. I want to increase my SIP investment from 1 lakh to 1.5L per month.
        Apart from this, I have 24L in Equity and 6L in Debt in ICICI Pru Long Term fund (g). this is a duration strategy fund. Should I look for Accrual Funds?

        Reply
        • Yavika-I suggest not more than 10% to 20% into equity when your goal is around 5 years. Also, in case of debt funds, stick to short term or ultra short term debt funds (even short term gilt) are best than timing the market and chasing return. You have already enough volatility due to equity, you are diversifying to compensate that, then stick to the low volatile product. It is the biggest myth among many that debt funds are SAFE.

          Reply
          • thank you, i will look for short term debt fund. since i want to hold for 5 yrs, i will avoid ultra short term funds.

            Reply
  4. Hi,

    I want to invest Rs. 5L on behalf of a 63 year old relative. He wants fixed monthly income from it. I have explored SSC, FD and banks but not impressed with the returns. Is there any option in mutual fund? Any good fund for that purpose? Moreover, will he get tax deduction on the invested amount and will the returns every month non-taxable? What is dividend tax?

    Regards,
    Mrinal

    Reply
    • Mrinal-Whether his dependency is from this income? Do remember that, considering his age, I suggest to stick to the products you already invested. MF investments are volatile and there is no guarantee attached to it. Hence, don’t risk his money if his monthly expenses are depending on such investment.

      Reply
  5. HI there,

    I would like to seek your advice for effective management of different Mutual SIP, we are a couple with 2 children and like to plan for education for in 6 years duration and my retirement on long term basis.
    My present allocations are below, please suggest if it needs any changes

    Birla Sun Life Frontline Equity Fund – Direct Plan (G) 4000/-
    Franklin India Bluechip fund growth 4000/-
    ICICI Prudential Value Discovery Fund (G) 5000/-
    IDBI NIFTY index fund 5000/-
    Motilal Oswal MOSt Focused Midcap 30 Fund – Direct Plan 6000/-
    ICICI Prudential Balanced Fund (G) 2000/-

    Your advice is much appreciated
    Thanks
    Suri

    Reply
    • Suri-Where is your debt portfolio? Also why two large caps, one Index Fund (which again concentrate on large-cap)?

      Reply
  6. Hello sir,

    Could you please let me know few good short term bond. Actually u told franklin short term bond is credit opportunity bond & value research shows it as short term bond. So want to know whether birla short term bond is safe and its not credit opportunity bond? I know birla’s medium term bond is credit opportunity one but not sure of bsl short term.

    Regards,
    Anchit

    Reply
  7. I would like to invest 1 lac in debt fund for the period of 2-3 year…on otherside m investing 4k per month in balance n large cap. For such short duration, is it advisable to invest in debt or credit opportunity fund?

    Reply
    • Harsh-Avoid equity and debt. Simply use Bank RDs or FDs. If possible arbitrage funds.

      Reply
  8. I am very thankful to you for sharing and helping everyone here. Can you please suggest what one can do with 20 Lakhs to generate 20,000 per month without loosing capital amount. Where one can invest that 20 lakhs in lumpsum.

    Reply
    • Lovely-You are expecting returns of around 12%, which is hard to generate from secured products.

      Reply
      • Thanks for reply.

        Can you please suggest how 20 Lakhs should be divided in to funds type. For eg 25% equity long term 25% debt short term 25% fixed deposit 25% mid cap fund?
        The risk profile should be low and liquidity should be easy. Just to park the money to generate some money to purchase home in future.

        Reply
        • Lovely-I am not sure of your goal. Initially you pointed that you need fixed monthly income from it. Now you claiming to be this is required for your home purchase in FUTURE, which I don’t know when. Hence, hard for me to guide anything.

          Reply
  9. Dear Sir,

    Which is better to invest : Banking & PSU debt mutual funds or Bank Fixed Deposit

    Since Banking & PSU debt funds invests only in Banking & PSU sectors, will it be more risky when compared to other debt funds which invests in debt instruments of all the sectors.

    Since the portfolio of Banking & PSU debt funds has only AAA rated debt instruments, I feel it to be less risky even though it invests in only Banking & PSU sector. Kindly advise.

    Reply
    • Thomas-The fund I named is different from the Bank FDs. You check the ranking of underlying instruments. All are AAA means secured right? Hence, go ahead.

      Reply
  10. Hi,

    I want to invest 10,000 per month in Mutual Funds to collect money for Home Loan Down Payment. I have selected a few funds mentioned below. Please let me know your suggestions on which funds should I invest in.

    ICICI Pru Exp&Other Services-RP (G) – 2,000
    ICICI Prudential Value Discovery Fund (G) – 2,000
    SBI Blue Chip Fund (G) – 2,000
    HDFC Liquid Fund (G)  – 2,000
    DSP-BR Micro Cap Fund – RP (G)- 1,000
    Axis Income Fund – Growth- 1,000

    Thanks in advance,
    Lokesh

    Reply
  11. am 40. I am presently investing Rs.2000 each in the following 5 mutual funds for last 1 year.
    Please suggest if I should change my portfolio.

    These are for the purpose of my retirement corpus required after 15 years.
    My risk appetite is medium.

    BIRLA SUN LIFE TOP 100 FUND – GROWTH
    Canara Robeco Emerging Equities Regular Growth
    Franklin India Smaller Companies Fund GROWTH
    L AND T INDIA PRUDENCE FUND – GROWTH
    L and T India Value Fund – Growth

    I am ivesting 30% of corpus in PPF.

    Reply
      • Hi Basavaraj,
        Though I have been investing (monthly SIP) in those funds for last one year, there is no +ve return.
        So, I am thinking of changing some of these funds. Can you please tell me which are not good in this list.
        Thanks a lot!

        Reply
        • Rupak-Whether you noticed why this low return? Reason is due to market volatility or fund underperformance. Whether you checked it?

          Reply
  12. Hello Sir
    I have invested 10000 RS SIP in following Mutual funds can please comment are these funds r best for more than 10 years
    1) Canara Robeco Emerging Equities Fund (1000)
    2) Motilal Oswal MOSt Focused Multicap 35 Fund (2000)
    3) SBI Magnum Balance Fund (2000)
    4) Axis Long Term Equity Fund (TAX SAVING) (3000)
    5) Birla Sun Life MNC Fund (2000)

    I would like to add 5000 per month more can u suggest me where to invest 5000

    Reply
  13. HI ,
    I am totally new in investing. i am 24 and want to grow my money . i can invest 10000 per month and i will increase it by 10% each year i want know best investing scheme and portfolio with diversions so I can get at least 10-20 % gain in each years with least risk factor. not only mf I can invest in other bonds or schems like NPS /PPF /FD.

    Reply
    • Anup-You have solid plan. But sadly you don’t know for how long you want to invest.

      Reply
  14. After the JP Morgan incident ,I feel it is better to go for more debt funds in various AMCs to avoid the credit risk
    For equity few good funds will do .Am i RIGHT?

    Reply
    • Ganapathy-Don’t go beyond short term debt funds. Because you already have enough volatility and risk in equity.

      Reply
  15. We are happy to read your comments and advice
    My wife and I would like to invest the amount as much WE can , started saving from Dec 2014 and invested in various funds and expecting a good amount at 12% after 10 years, Please suggest if any changes needed , basically for two daughter education and after needs. Your suggestion will help me to make some changes

    Fund name Amount invested/% allocation/mode
    1 Birla Sun Life Frontline Equity Fund 24000/6.37%/SIP
    2 Franklin India Prima Fund (G) 12000/3.18%/SIP
    3 ICICI Prudential Value Discovery Fund 22000/5.84%/SIP
    4 Motilal Oswal MOSt Focused Midcap 30 Fund 10000/2.65%/SIP
    5 IDBI Diversified Equity Fund 18000/4.77%/SIP
    6 IDBI Equity Advantage Fund 80000/21.22%/Onetime
    7 Mirae Asset India Opportunities Fund 33000/8.75%/SIP
    8 IDBI Nifty Junior Index Fund (G) 48000/12.73%/SIP
    9 ICICI Prudential Balanced Fund 30000/7.96%/Onetime
    10 Franklin Build India Fund (G) 25000/6.63%/Onetime
    11 UTI – Short Term Income Fund -Institutional Growth Option 40000/10.61%/SIP
    12 Tata Dynamic Bond Fund Direct Plan – Growth 35000/9.28%/Onetime

    thanks

    Reply
    • Kumar-The funds required are Birla, ICICI Value Discovery, Franklin India Prima Fund and UTI Short Term. Come out of all of them. It’s not required to invest in 12 funds. Manage it for around 50% into equity and 50% in debt ratio.

      Reply
      • Basically I invested in two accounts(MYSELF AND WIFE) with initial knowledge and later fund number increased with Expert advice and stopped investing in IDBI Diversified Equity Fund /IDBI Equity Advantage Fund /ICICI Prudential Balanced Fund/ Franklin Build India Fund (G) /Tata Dynamic Bond Fund Direct Plan
        Sorry for the confusion in it. all those above figures are total amount invested in a year .

        I will get 2 lakh rs from previous investments in a week and what is the best way to park the money for time horizon of 5+ years? thanks for your opinion

        Reply
        • Kumar-For parking amount of timeframe 5 years, use short-term debt funds.

          Reply
  16. I have question on SIP .

    I am planning to invest 15000/- month on mutual fund . I have shortlisted some 10 funds . But one of my friend suggested to go for only 2 to 3 fund instead of investing in multiple funds . Please let me know is it good idea to invest only on 2 to 3 funds instead of multiple

    Reply
    • Guruprasad-Yes, your friend is right. Investing in more fund does not serve the purpose of diversification. Instead, it creates portfolio overlap.

      Reply
  17. Hi,
    I started one SIP in UTI-Mid Cap(G) fund of Rs.1000.Now i want to Invest some amount in Low risk and A better Return For 1 year With SIP Plan.So can you suggest me which fund is best to Invest.

    Reply
  18. which is the best DEBT fund where I can get above inflation return?

    Reply
    • Ganapathy-Without knowing your time frame, it is hard to say a product. In Debt category also, there are different funds based on time and risk appetite of investor.

      Reply
  19. Hi Basu,

    After checking some market analysis i found that interest rate reduces after a Year.
    For eg. For 1st Year the returns would be high and from second year onwards it reduces drastically. So is it a good idea to invest in mutual funds for long term…?

    I have some lumsump money (17 lacs) which I want to invest in mutual fund for 2 years term and later it must be able to give me regular income. Please suggest where it can be invested.

    Reply
    • Suresh-Long Term means how much and what type of funds? Whether your investment in equity or debt? Please remember that long term debt funds are more riskier than short term.

      Reply
  20. Hi Basavaraj,

    Myself Varun
    I’m a new investor in SIP, father of two.
    My objective is to raise a fund of approx. 1 Crore through SIP within a time span of 12 years.
    kindly advise how to plan and diversify my investments in SIP mutual funds.
    My initial investment will be Rs. 5000/-monthly and can be doubled within 2-3 years and so on.

    Rgds
    Varun

    Reply
    • Varun-If we consider the monthly invest of Rs.5,000 and future value after 12 years as Rs.1 Cr then the fund must generate around 34% return. Which is totally HIGH expectation. My expectation from equity will always be around 10% to 12%.

      Reply
      • Hi,

        Totally agreed with you.

        As I said my initial plan of investment is Rs 5000/- per month which I will top-up in proceeding years.

        Can you please give me the suggestion on which SIP plan (large,mid&small and balance) should i invest as a beginner and considering my goal didn’t change how should i plan my investments and its top-ups.

        Please suggest which plan will be ideal for me to invest.

        Rgds
        Varun

        Reply
          • Hi Basavaraj,

            After a lot of research considering my age and risk taking ability I have decided to start with a large cap fund ( franklin India blue chip fund) as a minimum of Rs -5000/- per month to start with.
            Please share your view on the same.

            Rgds
            Varun

            Reply
              • Hi Basavaraj,

                Have enrolled myself to 2 MF.

                1. Franklin Bluechip- G 5000
                2.HDFG Balanced – G 2500

                I will be investing 2500 more per month within 3 months, would you suggest me to top up the same among these funds or to go for a different fund.

                If different then which fund should I go for?

                Rgds
                Varun

                Reply
                • Varun-If your time horizon is more than 10 years or so then add small and mid cap funds. Otherwise continue in same funds.

                  Reply
  21. Hi Basavraj,
    I have invested in below 2 large cap total amount of 2,50,000 each through montly SIP in last 5 years.My discussion is more with large cap fund only.

    HDFC TOP 200 and Birla Sunlife Frontline Equity

    1. Off late HDFC Top 200 is not doing Good so should i stick to this fund for one more year or should i move out ? Please advice.
    2.My plan is Add UTI Equity fund to the portfolio.

    —Should I add UTI Fund to above 2 funds ? whats ur feedback on this fund if i am looking for 10 yrs long term investment.
    —wanted to know more about UTI Equity fund, is it different from both of above fund or will they over lap.
    –I am looking for low risk but High return Large cap fund

    Reply
    • Indrayani-Before discussing about the fund performance, let me know what is your expectation fo return from this ivnestment.

      Reply
      • My expectation is around 15 to 17% annualized return and investment period is around 10+ years with monthly SIP of total 20k in Large Cap since Mid cap and Balanced I have already invested.Basically since i am investing in 2 large cap& i had doubt on HDFC TOP 200 due to recent performance.I am comfortable with BSL FL equity.and I am in dilemma whether to continue with HDFC TOP 200 or to add either UTI Equity or Franklin India Blue chip.

        I want your advice which second Fund should I go with so that I have decent returns and my Large Cap fund dont over lap.

        Indrayani

        Reply
        • Indrayani-I am more confident of HDFC rather than Birla. Check your portfolio of HDFC. If it is giving more return than your expectation then why to worry? Every time you can invest in a fund which is 5 or 4 star rated fund. Also, you have to give sufficient time (1 or 2 yrs) to check and then finally switch.

          Reply
          • Hi Basavaraj,
            There is some confusion from my end on communication I guess since you said you have more confidence on HDFC then Birla…I will repeat my Question

            HDFC TOP 200 and BSL FL equity both I have invested from last 5 yrs on monthly SIP.

            1 ) My Question was if HDFC TOP 200 is not doing Good recently then should I switch to either UTI equity or Franklin Blue chip ?
            2) Among these 4 Large Cap which 2 would you recommend in general so that there in no overlap on sectoral portfolio

            Reply
            • Indrayani-I understood your question.
              1) A fund always go through ups and downs for sometime. It does not mean that we switch frequently. Give time to it for a year or two. If it is consistently under performing the benchmark (peer comparison not matters), then switch.
              2) What you want to say?

              Reply
  22. Dear Basu,

    1. I have 20 Lakhs of cash which I want to invest with a risk free return of 8% post tax. I invested in ICICI FMP but had a bad experience as the return was very poor around 4% in the year 2012. But don’t prefer FD, due to tax slab. Can you please suggest few funds or at least where I can invest and can sleep peacefully.
    2. I have SIP of 30000/pm with the following funds, please advice, if they are fine.

    a.HDFC Balanced 15000
    b. Franklin India Bluechip 7000
    c. Reliance Equity Oppurtunity Fund 8000

    I will like to contact you on few suggestions, how can we get in touch

    Cheers,
    Kaushik

    Reply
    • Kaushik-Major information you are missing is, when you need this money back and what is the purpose of accumulating this money. The same applies to your mutual fund investment.

      Reply
  23. Dear Basu,
    My current portfolio includes following SIPs
    Birla Frontline 2500/- pm
    Birla MNC 2500/- pm
    IDFC Premier Equity 5000/- pm
    ICICI Pru Dynamic 5000/- pm
    Reliance Regular Savings Balanced 5000/-
    HDFC Top 200 5000/ pm

    I want to prune my portfolio. May you offer suggestion in this regard. I don’t have any short term financial goals

    Arun Kumar

    Reply
    • Arun-I think your investment is more concentrated towards small/mid cap. Why not you come out of two large and mid cap funds (Birla, HDFC and ICICI) and retain one large cap? I am comfortable with IDFC, but not with Birla MNC. I prefer HDFC Balanced over Reliance Balanced fund.

      Reply
  24. hello sir, my mutual fund sip portfolio

    1.kotak select focus fund-2000

    2.Sbi blue chip fund-2000

    3.Hdfc midcap opportunities fund-2000

    4.Idfc premier equity fund-2000

    5.Sbi pharma fund-1000

    6.Uti mnc fund-2000

    7.Axis long term equity fund-1000

    i would like to invest in PPFAS LONGTERM VALUE FUND 3000 sip can i add this fund in my portfolio?

    Reply
  25. (If a fund manager takes a duration strategy based on interest risk, then such strategy is known as duration strategy. For example, if an interest rate drops then the fund manager tries to hold long maturity bonds and at the same time if an interest rate falls then he adjusts to short-term maturity bonds.Usually, they invest in low credit rated funds like less than “AA” rated. Lower the credit risk leads to higher the return. Because the risk of default also increases.)
    What is the difference in interest rate drops and interest rate falls? How lower credit risk leads to higher returns?

    Reply
    • Desai-Well catched. It was my mistake and corrected it. It should be “If a fund manager takes a duration strategy based on interest risk, then such strategy is known as duration strategy. For example, if an interest rate DROPS then the fund manager tries to hold long maturity bonds and at the same time if an interest rate RAISES, then he adjusts to short-term maturity bonds.” and “Usually, they invest in low credit rated funds like less than “AA” rated. Lower the credit RATE leads to higher the return. Because the risk of default also increases.”

      Reply

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