Exit or hold? What you should do if your mutual fund is exposed to DHFL

Take a call to stay put or opt our based on whether you think the company will be able to find a strategic investor

Debt funds, as a category, are hurtling from one crisis to another. After defaults by Infrastructure Leasing & Financial Services and delays in payments by Essel group, last week, Dewan Housing Finance Corporation (DHFL) failed to pay interest of Rs 960 crore last Tuesday on its debt. This failure triggered a downgrade of its debt instruments by rating agencies and thereafter mark-downs of 75-100 per cent in the valuations of these papers. Funds that had high exposure to DHFL debt took big hits on their net asset values, going up to 53 per cent (see table). 

DHFL responded saying that there