Should You Invest in a Credit Risk Fund? | Ft. Mr. Akhil Kakkar | Fund Manager Series

ICICI Prudential Mutual Fund • 1 day ago

Original source

What This Video Is About

This video introduces credit risk funds, explaining how they work and their benefits. Credit risk funds invest in bonds with higher yields to generate income, minimizing volatility by not trying to time interest rate cycles.

Major Ideas Discussed

  • Credit risk funds invest in high-carry bonds to reduce interest rate volatility and generate income.
  • The risk-reward matrix of credit risk funds is attractive, with Double A category bonds offering 0.5% to 1% extra carry over AAA bonds, and A category bonds carrying 1.5% to 2.5% additional carry over AAA bonds.
  • For a monthly SIP of ₹10,000, credit risk funds should be 20-30% of the debt allocation.
  • Investors should read scheme-related documents carefully, assess individual risk tolerance, and financial goals before allocating funds to credit risk funds.

What to Watch Next

Investors should monitor their individual risk tolerance, financial goals, and market conditions to determine the suitability of credit risk funds for their portfolio.