Neutral impactEconomy
Investors should avoid thinking of debt as a risk-free asset class: Devang Shah of Axis Mutual Fund explains why
Mint 48 min ago·5 Oct 2026, 10:52 am
Devang Shah of Axis Mutual Fund warns that investors should not treat debt as a risk-free asset. He explains that debt funds carry specific risks like duration, credit, liquidity, and reinvestment risk, which can impact returns. These risks vary significantly across different debt investments, meaning a high yield does not always guarantee safety.
This perspective is crucial for retail investors, especially those nearing retirement. A portfolio relying solely on debt may face volatility if interest rates rise or credit quality deteriorates. Shah advises a careful review of debt holdings to ensure they align with one's risk tolerance and financial goals.
Investors should watch for changes in interest rate policies and credit spreads. Understanding the specific risks in a debt fund is essential for making informed decisions. It is important to assess whether the potential returns justify the associated risks in your portfolio.
Excerpt from Mint
Debt is not a risk-free asset, with duration, credit, liquidity and reinvestment risks varying across investments. Axis MF’s Devang Shah explains how investors should approach debt, 7%+ yields and retirement portfolios. Debt is often treated as the low-risk anchor of an investment portfolio, but that does not mean all…Read the original at Mint
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