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Know the risks in debt funds before parking your savings

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Debt funds are facing a risk re-rating by investors in the light of the covid-19 pandemic and the unprecedented move by Franklin Templeton Mutual Fund to shut six of its debt fund schemes.

If you have been singed by the events or are apprehensive about the economy and the impact on debt fund investments, then this is the time to revisit the reasons why you have invested in debt funds. “Debt funds are not seen from an asset allocation perspective.

The selection seems to, typically, start with which category—credit or duration—is expected to do well and that indicates that the investor is chasing returns.

People get whipsawed by short-term market movements, panic and then they redeem. But for an investor who has made an allocation-based

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