Retail investors should worry about quality of funds, rather than size

Portfolio's quality, liquidity vital concerns in debt funds

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Many experts believe that while large corporates should have minimum AUM thresholds, retail investors need not confine themselves to large-sized funds

Sanjay Kumar Singh New Delhi

4 min read Last Updated : Aug 04 2020 | 9:45 PM IST

In the Financial Stability Report published on July 24, the Reserve Bank of India (RBI) flagged the issue of concentration risk in debt mutual funds (MFs). Corporates and high networth individuals (HNIs) comprise more than 90 per cent of their assets under management (AUM), in contrast to equity funds, where their share stands at a more balanced 48 per cent. The predominance of corporate investors in debt funds creates certain risks.

Let us understand why debt funds become highly concentrated. “Large corporates have an AUM threshold, which means they only invest in a fund having a certain minimum size. As a

Topics : Retail investors Mutual Funds assets under management high networth individuals Reserve Bank of India RBI

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