Debt Portfolio Management

Debt Portfolio Management:

Debt portfolio management has to contend with the construction and management of portfolio of debt instruments, with the primary objective of generating income. Just as the equity fund manager has to identify suitable stocks from a larger universe of equity shares, a debt fund manager has to select from a whole universe of debt securities he wants to invest in.

Debt schemes of a mutual fund have a short maturity period, generally up to one year. nevertheless, some schemes regarded as debt schemes do have maturity period a little longer than a year, say, eighteen months. Thus in the context of “debt” mutual funds, depending upon the maturity period of the scheme, the fund’s managers invest more in “market-traded instruments” or the “debt securities”. The difference in market-traded instruments and debt securities is that the former matures before one year and the later after a year.