"When it comes to deploying their resources for long-term debt products, the mutual funds bet the most on the government securities or the sovereign," according to an ASSOCHAM analysis.
"Making extra bucks in the short term and safety through risk aversion in the long term is the name of the game for the mutual funds operating in the debt space," said the analysis done by ASSOCHAM.
The government securities, which are considered to be the safest bet for Mutual Funds (MFs) for deploying money in assets with a maturity period of one year and above, contribute about 20 percent of the total Asset Under Management (AUM) of the MFs.
However, for securities with a three to six month maturity period, the Non-banking Finance Companies, (NBFCs), bank certificates of deposits and corporate bonds are among the favourite avenues for the MFs. The treasury bills of the government are also a popular choice.
"The market for the debt instruments of the private corporate sector is yet to emerge in India, thus making the companies depend more on the term finances from the commercial banks," said the ASSOCHAM spokesman.
The analysis done by ASSOCHAM further stated that "Debts are typically products which are sold among those seeking more security and less of growth. In the Indian context, the confidence factor is for the sovereigns for the long term.
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