An employee uses a marker pen to write on glass wall. (Photographer: Dhiraj Singh/Bloomberg)

Investors Must Return To The Drawing Board And Re-Assess Portfolio, Says Kaustubh Belapurkar

Mutual funds investors need to revisit their portfolio and need to “get out” if they cannot endure the risks and uncertainties associated with debt instruments, according to Kaustubh Belapurkar, director of Fund Research at Morningstar Investment Adviser India.

“Every investor needs to go back to the drawing board and figure out what he holds in his portfolio and also do a reassessment of their risk-return parameters,” said Belapurkar in an interview with BloombergQuint, adding that there was a mismatch between ground realities and expectations of investors.

Belapurkar’s comments come in the wake of Reliance Mutual Fund’s plan to mark down the value of investments in Anil Ambani group’s Reliance Home Finance Ltd. and Reliance Commercial Finance Ltd. following rating downgrades of non-bank lenders.

Mutual funds and asset management companies have grappled with multiple issues such as the exposure to instruments of the Infrastructure Leasing & Financial Services group and exposure to companies whose promoter shares have been pledged.

Earlier, mutual funds holding shares of Zee Entertainment Enterprises Ltd. pledged by Essel Group not only allowed a standstill till Sep. 30 if share price falls but also on upcoming obligations on these borrowings through non-convertible debentures.

Investors thought that fixed income is fixed, and is completely isolated from any credit events. Events like this have gone to prove that is purely a myth.
Kaustubh Belapurkar, Director of Fund Research, Morningstar Investment Adviser India

Belapur also urged investors to look at fund managers’ underlying holdings rather than ranking them purely on returns. “Credit-risk funds are doing what they are meant to be doing.”

Watch the full interview here: