MFs to up corp bonds exposure: Assocham

The exposure of mutual funds (MFs) to corporate bonds was likely to go up to 80% of their total debt corpus considering the fall in prices of government papers after interest rates started moving up.

MFs' expoure to government securities may come down to 12% by the end of 2005 from 41% in 2003 as funds tend to invest in short-term instruments, according to an analysis by Assocham.

"MFs will keep on increasing their exposure and affinity for corporate bonds in 2005 due to the higher duration of maturity of the government scurities than corporate bond and the subsequent valuation losses in a rising interest rate regime," Assocham president K Sanghi said in a statement today.