Credit quality bucketisation in debt mutual funds

Tue, 12 May 2026 00:00:00 +0000

Credit quality bucketisation in a debt mutual fund refers to the percentage distribution of the portfolio across credit rating categories, from the highest quality (AAA-rated government securities and top-rated corporate bonds) down to below-investment-grade (BB and lower) instruments. It is a mandatory disclosure in Indian debt fund factsheets and is the primary tool for assessing default risk and potential for credit-driven NAV shocks.

Credit quality sits alongside Macaulay duration , modified duration , and yield to maturity (YTM) as the four key risk metrics for Indian debt funds.

Credit risk mutual fund

Tue, 12 May 2026 00:00:00 +0000

A credit risk mutual fund in India is an open-ended debt scheme that must invest a minimum of 65% of its total assets in below-AA-rated corporate bonds (specifically AA-rated and below, including A, BBB, and sub-investment-grade instruments), under SEBI ’s October 2017 scheme categorisation circular. These funds aim to generate higher yields than investment-grade debt funds by taking on credit risk – the risk that the issuing company may default on interest payments or principal repayment. Credit risk funds are the highest-risk category within the debt mutual fund universe and have faced significant investor confidence issues following a series of credit events in 2019 to 2020.

Credit Risk Fund on WebNotes

Credit quality bucketisation in debt mutual funds

Credit risk mutual fund