Debt funds roiled, but fund houses are okay
- The ongoing cycle of rising interest has shrunk the asset base of debt funds.
Interest rate hikes by the Reserve Bank of India are roiling debt funds. Over the past year, most have delivered returns in low single-digits and their assets under management are down 2.5%. Indeed, the grim near-term outlook on interest rates should be bad news for fund houses as their income depends on the amount of assets they manage. However, this time, equity funds are proving to be a stable counter to weather this turbulence.