Edelweiss MF turns against riskier debt after India’s Covid-19 woes
A top Indian fund manager is shunning lower-rated rupee corporate bonds until the impact of the world’s worst Covid-19 crisis on weaker borrowers is better understood.
The level of stress in the economy especially for small- and medium-sized enterprises is still unclear after states locked down to curb the spread of a second virus wave from March, said Dhawal Dalal, who oversees $4.8 billion of debt assets at Edelweiss Mutual Fund. Dalal, who manages one of the best-performing debt funds over the past year, has added only AAA rated corporate notes to his portfolio since March.
“As the economy showed signs of recovering after the first Covid-19 wave, we had asked investors to start considering non-AAA corporate bonds” Dalal said in an interview last week. “But after the second wave, once again we have reverted back to asking investors to be cautious” until at least the second half of India’s financial year, starting in October, he said.
Read More: Edelweiss MF’s IPO-focused scheme to go open-ended amid robust pipeline
India’s central bank earlier this month lowered its economic growth forecast and announced a raft of new measures to support businesses, as new strains of the virus threaten recoveries in emerging and developed nations. Fixed income managers in India have favored safer credits this quarter, with the extra spread that investors demand to hold BBB rated notes over top-rated peers near a 2005-high recorded in April.
Dalal’s Edelweiss Banking and PSU Debt Fund is the best performer among India’s mutual funds focused on such securities over the past year, returning 7.65% on its regular investment plan, according to data from the Association of Mutual Funds in India.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
