Mutual fund investment in corporate bonds has remained sluggish over the past five years

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New Delhi: By the local mutual fund industry, around Rs. 50 lakh crore corporate bond investments have remained largely stable over the past five years. Actively managed debt funds at the end of April 2019 stood at Rs. 6.73 lakh crore assets were being managed. Debt funds have the facility to invest a large portion of their corpus in corporate bonds. As of last month, his wealth had grown by just 9 percent to Rs. 7.3 lakh crore has been done.

According to data from the Association of Mutual Funds in India (AMFI), this slowdown has been seen despite a doubling of assets under management (AUM) during the period. AUM includes assets of fixed schemes and Bharat Bond ETFs.

However, the AUM of corporate bond-focused fund schemes does not accurately reflect investor appetite for corporate securities. Many of these schemes also invest in government securities, state development loans and money market instruments.

SEBI sources said the IL&FS crisis had shaken investor confidence and reduced investment participation, affecting the pace of capital formation. The debt market has lost five years of capital formation as public confidence in it has eroded.

Industry players say that apart from the IL&FS crisis in 2018, six credit risk funds were closed by Franklin Templeton Fund in 2020, with returns falling in 2021 due to falling interest rates.

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