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Then there is the risk of the fund manager. Actively managed debt funds are managed by specialist fund managers who may have strategies that can positively or negatively impact the performance of the fund.
And finally, there is a credit risk, which is the problem we have with Franklin Templeton. If the stocks a fund invests in have a lower rating, then they will generate a higher return, but also carry a higher level of risk. There is a greater chance of default. In a situation where there is risk aversion, said debt does not find many takers.
Rao: There is also the economic risk that affects everything, but it is also dramatically affecting mutual fund investments. In a situation where there is an economic shock, there will be great redemption pressure. In this case, we do not know how long the crisis will last and how many defaults we can expect in the coming months. This risk of default is faced by banks as lenders to such companies, and by mutual funds as investors in their debt.
