How To Survive A Drought Of Quality Debt Funds?

Many parts of India are facing severe drought this year. In some regions, residential areas are getting municipal water supply only twice or thrice in a month. March is here, and it is going to be tough to sustain water supply for the next 2 ½ months until the monsoon. When there’s a scarcity of clean water supply, the only option people have is to switch to bottled water which is unaffordable to many. Those who cannot afford the expensive water have no alternative but to rely on tanker supplies. This is a cheaper alternative but you always have to deal with problems such as the higher proportion of dissolved salts or at times even contaminants. Of course, we are unsure about the source of the water, but questioning the level of hygiene seems insensible. How can we expect it to be pure? Some people do the smart thing they use bottled water for drinking purpose, and for other activities use water supplied by tankers and other sources. However, what would you do when even bottled water is impure?

Investors in debt mutual fund schemes might ask themselves similar questions very soon. The investment climate around them is horrifying. Companies are defaulting, banks are slashing interest rates on deposits (keeping the lending rates more or less unchanged) and, investing in insecure deposits is always risky. Good quality debt securities have become scary and assessing the risk has become demanding. Under such a scenario, many investors prefer to take the mutual fund route and invest in debt schemes. As the professionals manage the portfolios, investors believe that their hard earned money is in safe hands. However, startling revelations like the one is given below prove to be nasty surprises for them.