Recategorisation of debt funds: Keep a close eye on your scheme's portfolio

While funds will stick to their stipulated duration band after categorisation norms kick in, they may take credit risk, which investors should watch out for

While the impact of recategorisation on equity schemes has been much discussed, debt and hybrid funds have not received as much attention. But these schemes have also seen considerable impact. Investors should first understand the change that has happened in their funds and only then decide whether to stay in the fund whose category has been changed, or move to another one.  

Among debt funds, a large number of categories,16, have been created. Among low duration, you only had liquid funds earlier, which invested in papers having a maturity of up to 91 days. But now a few new