Prajna Capital - An Investment Guide

MF industry, which survived a major crisis after the stock market crash, can grow in the coming years. Excerpts... Market risk ratings Until now, we have had only one form of rating for money-market funds — credit rating. Internationally, money-market funds are rated on two parameters – credit rating and market-risk rating. Market-risk ratings are dependent on the duration of the portfolio and the liquidity of the underlying assets the fund holds. While we do not have a full fledged dual rating system in the country, the recently introduced ceiling on the maturities of the fund may be the first step. A dual rating system may make functioning of the industry robust like it has in western countries. But let’s not forget that, even if that is done – you may continue to have problems during abnormal months, like the one we have already witnessed in October 2008. The market risk ratings can only reduce the risk for investors, but it cannot eliminate it completely. Retirement investment ...