IL&FS crisis: Debt plan investors should thoroughly check fund's portfolio

Mutual funds' exposure to NBFCs through short-term commercial papers has risen three times since 2016

The series of defaults by Infrastructure Leasing & Financial Services (IL&FS) has hurt debt funds (see returns table). Worse, with funds like DSP Investment Managers selling the debt papers of Dewan Housing Finance, despite no apparent problem in the company, there is palpable fear among investors and debt-fund managers.
 
Says Pankaj Pathak, fund manager, fixed income, Quantum Asset Management Company: “The IL&FS incident should be seen along with many such instances in the past few years wherein sudden credit rating downgrades or defaults by companies like Amtek Auto, Jindal Steel & Power (JSPL), and Ballarpur Industries impacted debt mutual