How to choose a debt fund
March 13, 2011 7:51 am
I am confused about how to chose a debt mutual fund. My questions and concerns given below:
- Is it true that debt funds with long-maturity are more high-risk-high-gain than short-maturity funds?
- I have decided not to trust any credit rating agencies after 2008 sub-prime crisis. That leaves me only with gilt-funds for my debt portfolio. Any comments regarding this thought process?
- I have heard that institutions invest heavily in debt funds. If in my debt-fund, a major chunk is made of institutional customers (rather than retail customers), I expose myself to whims of the institutional customer. Is there anyway to find out what percentage of debt-fund-customers are retail and what percentage is institution/company? Any comments about this approach of treating retail-customer-percentage as a parameter for chosing a debt-fund?
- Unlike equity, in debt fund size matters. Is this statement true?