Figuring out a simple do-it-yourself framework for short term investing

(3 minute read)

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We have spent some reasonable time analyzing and understanding debt mutual funds

Part 1 – A primer for investing in debt mutual funds (Link)
Part 2 – 8 factor framework for analyzing any debt mutual fund (Link)
Part 3 – The ultimate guide to liquid funds (Link )
Part 4 –
Here’s a quick way to select Ultra Short Term Funds (Link )
Part 5 – Making sense of Short Term Debt Mutual Funds (Link)
Part 6 – Credit funds – Don’t count your returns before they hatch (Link)
Part 7 – Here’s why I don’t invest in credit funds (Link)

Now comes the most important question..

All this is fine. But how do I put all this into action?

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Before we jump into the action plan, let’s decide on the the scenarios under which we plan to use debt funds.

I personally use it under 2 scenarios:

  1. Relatively short time frame + Goal is extremely critical (i.e cannot be postponed eg education fees, marriage etc) and no back up funding plan if there is a shortfall + Safety of money is priority i.e no losses whatsoever
  2. Part of asset allocation

Taking into account the above scenarios, let us put in place a simple investment framework for our short term investments (less than 5 years)


  1. 1 day to 6 months – Liquid Funds
    • Eg Axis Liquid Fund, Kotak Liquid
  2. 6 months to 2 years – Ultra Short Term Funds
    • Eg IDFC Ultra Short Term Fund, Reliance Money Manager Fund
  3. >2 years – Short term funds
    • Eg – Axis Short Term, IDFC SSIF – Short Term Plan
  4. Avoid credit risk: No credit funds
  5. Minimize interest rate risk:
    • No Income funds (funds with high modified duration)
    • No Dynamic funds (funds which adjust their modified duration to take advantage of interest rate movement)

The basic idea is to keep my debt fund portion,

  • As simple and basic as possible
  • Minimize risk to a large extent
  • Spend minimal time and effort in tracking

All risks and the chase for returns will happen in my equity portion where I also intend to focus majority of my time and efforts.

So given the context, we have put in place a reasonably good framework for short term investments. 

But then Albert Einstein suddenly reminds us..

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Now, the next step is to play the devil’s advocate and question

  • Arbitrage funds don’t get taxed post 1 year. Aren’t they better than debt funds on a post-tax basis for investments more than 1 year? 
  • Can’t we use some portion of equities for non-critical goals in the 3-5 year range to improve returns? 

Honestly, I don’t have immediate answers. So in the coming weeks, we shall find out the answers to both these questions and see if we can improve upon our existing framework.

Till then happy investing 🙂

Disclaimer: No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments.

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Real Estate, My Mom and Mr Charlie Munger

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I had written an earlier post here on how real estate markets have become very expensive (especially in Chennai) and the need to be cautious. As expected and oblivious to whatever I write, the usual pressures from my family to buy a home continues and lectures on real estate from my mom have become a routine.

Being from the financial industry (which also makes me biased against real estate), I have the opinion that equities are better over the long run vis-a-vis real estate to create wealth. But when I look around, almost everyone around me has a real-estate-made-me-rich-story. I hardly hear stories of normal-neighbour-next-door kind of people who have made wealth from equities.

Am I missing something ??

In order to solve the confusion, let me seek the help of one of the greatest minds Mr Charlie Munger.

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If interested, you can read the entire article in detail here

Applying this advice to our problem,

My opinion: Equities are better than Real estate to generate long term wealth

So let me try and argue on the opposite viewpoint i.e “Real Estate is better than equities to generate long term wealth”  to see if I am entitled to hold my opinion.

The Wealth Creation Ingredients:

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If you remove all the bells and whistles, wealth creation boils down to the simple formula:

Wealth = Invested amount * (1+returns)^no of years

Thus, wealth creation needs three ingredients in place:

  • Long time horizon
  • Adequate Investment Amount
  • Reasonable returns

So we shall evaluate “real estate investment vs equities” in terms of ability to create wealth through these three parameters:

1. Long Time Horizon:

Clock, time, vintage,

In my personal opinion I think this is probably the biggest advantage for real estate vis-a-vis equities.

While this is anecdotal, you would agree that majority of people who have created wealth in real estate have held it over decades. 10,20,30 year investment periods are numbers that you commonly hear when it comes to real estate.

In fact our own properties bought by my parents have been held for over 20 years and I don’t think for the next 10 years anyone is even thinking about selling.

The major reasons that contribute to this long term holding is primarily the emotional connect a home creates, the fact that Indian society still sees an own home as a status symbol and the inherent belief that over the long term, home prices will definitely keep going up. The lack of liquidity, taxation, black money etc are few other reasons I can think of for the long holding period.

Unfortunately this is not the case with equities. Thanks to the volatile nature of equity markets, most of us are not able to hold equities over a long time period. You hardly see people who are able to hold on to equities for long periods.

But what’s this fuss about longer time horizons. Why is it such a big deal ?

Let us understand this with an example of someone who makes 15% annualized returns

Compounding @ 15% (graph)

While the effect of 15% returns on your investment is gradual in the initial years the impact magnifies dramatically as your investment period increases.

The logic is pretty simple – you can see that the money approximately doubles every 5 years. As you move past the first 20 years, in the next 5 years your doubling effect is phenomenally magnified given that you already have a 16 times initial amount as your base. Similarly between 25 to 30 years the multiplying effect is doubling on a 33x base which gives you a 66x returns. See that!!

So as seen, an additional wait of 5 to 10 years brings about a significant change in your final investment value or put in other words, the mutiplier impact is dramatic as the time frame increases.

Hence the key thing to remember is:

Compounding or the multiplier effect is back ended

While most of us don’t realize this intuitively, real estate investing and the “my property multiplied by so much” stories are simply a reflection of this humble boring concept commonly referred to as compounding.

You can refer the table below to see the “multiplier effect” at various returns for various periods.

Long term Compunding @ different rates

So when it comes to the first ingredient of wealth creation – long time horizon, real estate scores over equities hands down!!

2.Adequate Investment Amount

Most often than not, the first real estate investment for most of us happens around the age of 30 given the immediate pressures from our folks after getting married. The story generally goes like this –  20% down payment via our savings and some money from our families and the remaining 80% through a bank loan. Then for the next 20 years or so, you are forced to save in order to pay for the EMIs (Equated Monthly Installment).

While this of course is not something very enjoyable (and personally I am not a big fan of this working-your-ass-off-to-pay-emi’s-concept), you actually end up benefiting from the most essential behavior for wealth creation – the discipline of consistent savings!!

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Equities have been trying their hand at implementing this behavioral change through the concept of SIPs (i.e Systematic Investment Plan) in mutual funds.  While its a great start, I still think the forced saving which an EMI creates is just simply too powerful.

One one side, there is a sugar patient and on the other, someone like me who wants to reduce weight by avoiding sugar – the intent is the same – but who do you thing is likely to avoid sugar !! (I hope you are not checking my pics to confirm the answer)

Again the amount in play i.e your invested amount is significantly large in case of real estate. A long time frame + large investment amount is a deadly combination (assuming you get the returns part reasonably right).

In equities, it takes most of us some time to warm up to the idea of stocks or mutual funds. Most of us are testing waters with small amounts in the initial stages and take some time to get comfortable in deploying large amounts. Not able to do leverage is another disadvantage (and please.. taking leverage for equities is the last thing you should do)

So again, I guess real estate scores over equities in our second parameter – adequate investment amount as well.

(However if you are someone who has already saved enough and don’t need to take a loan for buying real estate then your ability to invest a large amount is the same be it in equity or real estate. In this case both equities and real estate have the same advantage.)

3.Reasonable returns

XIRR: How to calculate returns on your portfolio?

Equities definitely have an edge over real estate when it comes to long term returns. The zero long term gains tax post 1 year is the icing on the cake. Historically, equity returns in India as seen in the Sensex index has been around 15%. (Mutual Funds have given 2-4% above the Sensex)

Sensex - Returns Max,Min,Avg.png

Source: My own post here 🙂

Real Estate Returns have historically been around 10-12% over long periods (Source: How to Buy a House by E.Jayashree Kurup). And as seen below you can see that for most periods equities have comfortably outperformed Real estate returns.

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Source: Forbes Article

More than the data, my fundamental premise for believing that equities will have better returns over long term is that – ultimately equities are a proxy to entrepreneurship. And entrepreneurs logically should continue to make more money than an apartment.

After all isn’t it only fair that someone with the ability to generate ideas, convert them into viable products/services, market and sell them profitably, employ people, deploy land etc should generate a higher return at least more than the input costs (real estate is an input cost).

So finally, on our third parameter of long term returns, equities score over real estate.

Parting Thoughts

Thus putting all these together,

Real Estate in terms of wealth creation has the inherent advantage of long investment time horizon and large investment amount. So the key is to ensure that you don’t get it wrong on the  third component – reasonable returns. Most important is to not blindly believe that real estate returns are always great and just like all asset classes, real estate also goes through cycles and the key is to buy when valuations are reasonable. (Read more on how to evaluate real estate investments here )

In Equities, while long term returns are good, the real problem lies in the fact that not many of us can hang on for a long period (as in real estate) and most often the capital in play is also not adequate. So as investors we need to start thinking more on “how do we survive the volatility” and “how do we inculcate the discipline to save and invest regularly”.

All other issues such as which stock to buy, fund selection, expense ratio, index vs active, direct vs regular, how to time equity markets blah blah.. which take up most of the media and blogging space is a clear example of missing the tree for the woods. While its good to read about these issues, lets make sure that as 80:20 investors we get our long term investment horizon and savings discipline in place first before we start worrying on these issues.

So thus by applying Munger’s framework and thinking through my mother’s advice, I have finally come to a conclusion.

 My earlier opinion:
Equities are better than Real estate to generate long term wealth

My revised opinion:
Equities are better than Real estate to generate long term wealth only if you can hang on for a long time period and have a reasonably large investment amount in play

As always, happy investing folks..

Disclaimer: No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments.

Here’s why I don’t invest in credit funds

In our earlier post here we figured out that:

In credit funds, the real issue is not about credit risk , it’s about liquidity risk !!

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Long term investors have to focus on the trade off  between – Expected returns vs Risk

There are two fund management organizations – IDFC MF and Axis MF, who have also communicated their views on credit funds. Let’s read them and see if we can get some additional perspectives.

You can read IDFC fund manager Suyash Choudhary’s thoughts on Credit risk here

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  1. The Macro Reason to Reassess Credit Risk – Link
  2. Managing risks in investment – Credit vs Duration  – Link


Highlights from the note

  1. Long term investors have to focus on both expected return as well as risk when investing
  2. Since this trade-off can always change with changing triggers, the focus should be on expected return versus manageability of risks taken.
  3. Credit risk and duration risk are both legitimate means to earn ‘excess’ returns over fixed deposits
  4. Duration Risk:
    • Duration risk works via a daily mark-to-market channel and hence offers more short term volatility in return profile (although the longer term profile may actually be much more stable)
  5. Credit Risk:
    • Credit risk is binary in natureeither manifests or it doesn’t. This is especially true in a market like ours where there is hardly any secondary market price discovery for lower rated credit assets. Thus change in credit quality doesn’t get dynamically reflected in price changes
  6. The difference really lies in the ability to respond in terms of curtailment of risk if the view changes on evolving developments
  7. Duration risk can be managed on an ongoing basis since it is backed by a robust secondary market where one can buy and sell.
  8. Credit risk cannot be managed on an ongoing basis which makes the ongoing management of the risk difficult.
  9. Also, the relative choice (of how much of credit risk and duration risk to take) has to take into account the macro environment which either creates a tailwind or a headwind to each type of risk
      

You can read Axis fund manager Sivakumar’s thoughts on Credit risk here

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  1. Credit Issues in Fixed Income Portfolios – Link
  2. Credit Quality – Link
  3. Video – Link

Highlights from the note

  1. Effect of credit default is lumpy and is not captured in daily mark to market. Thus the risk is not captured completely until a downgrade / default event
  2. Apart from the credit risk concerns, the other reason that credit portfolios face a significant risk is the lack of liquidity in the secondary market in lower-rated instruments. This presents a contagion risk for the markets since in case there is a need for any investor to liquidate its portfolio over a short notice, it will be exceedingly difficult to do so.
  3. Understand the credit profile of the fund before investing
  4. Concentrated portfolio increases impact of credit event (i.e downgrades & defaults) – Affects a large part of concentrated portfolio
  5. Not launched credit fund + Conservative approach to credit + Disciplined portfolios with tightly defined limits for most of our funds – >75% AAA – <2% per issuer AA- and below + Relatively liquid portfolios

Parting thoughts:

The above views from these two fund managers, confirm our concerns on credit funds especially on the “liquidity” risk.

Given the above arguments and if you agree with me on the liquidity concerns underlying credit funds then:

Stick to funds with high credit quality

As earlier stated, I personally tend to avoid credit risk in my debt fund portfolios.

I also derive far more comfort on the credit quality when it comes to Axis and IDFC debt funds because they share similar views as mine with regards to credit funds. And the best part is these guys communicate regularly, which also helps us understand their investment strategy. This is precisely the reason why you would have seen me include their funds in our debt selection here

That being said, the above notes from the two fund houses were provided purely with the intent of improving our understanding and by no means do I have any connection with them. While I may have a personal preference towards these two, there are obviously other major fund houses, which also have several funds with high credit quality and you are free to choose whichever suits you the best.

As always happy investing..Cheers 🙂

Disclaimer: No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments

Credit funds – Don’t count your returns before they hatch

If you have been following my debt fund related posts, you would have noticed that I generally tend to avoid credit risk in debt fund portfolios. In today’s post we will explore the thought process that goes behind my decision to avoid credit risk.

If you are new to the blog, you can go through my earlier post here to get an understanding of credit risk in debt MF portfolios.

What is a credit fund?
Credit funds are basically debt mutual funds which lend a major proportion of our money to relatively riskier corporate companies and in turn earn higher interest rates for us. So when you look at the fund portfolios, you will see a relatively larger proportion of debt papers which are rated below AA. (Credit rating is an indication of the underlying company’s health and its ability to repay its debt. The lower the rating, the lower are its chances to repay its debt on time.)

Eg  Franklin India Dynamic Accrual Fund

Higher proportion of “below AA” rated papers..

Credit Strategy
Source: Morningstar

which helps in providing higher interest rates..

Credit Strategy - YTM

See that.. a whopping 10.87% compared to a current YTM of ~7.5-8% for most of the short term funds which invest in high quality papers (i.e predominantly AAA rated papers). These funds generally have Yield to Maturity (i.e interest rate return) which are 1 to 2% above short term funds which invest only in high credit quality papers.

Credit funds generally invest in short maturity papers between 1-3 years and the modified duration is mostly around 1-2 years. Thereby the “interest rate” risk taken to improve returns is kept at moderate levels and these funds primarily depend on the “credit risk” taken to generate additional returns.

The basic idea behind credit funds is that – by deploying their own analysis to these lower rated papers, the fund management research team  would be able to identify certain companies which have much better health (than evaluated by credit rating agencies) or is expected to improve and hence the company’s ability to repay its debt is much better than perceived. This allows the fund to benefit from higher interest rate paid by these companies provided the fund manager’s evaluation is correct and the underlying companies to which they have lent repay their debt and interest on time.

Certain fund houses also take sufficient collaterals (in the form of covenants, shares, real estate securities etc) to offset the losses if there is a default from the issuer. Some have inbuilt agreements for priority in repayments to ensure that they exit when they see any small sign of distress.

Credit funds generally come under different names such as accrual funds, corporate bond funds, credit opportunities funds, income opportunities etc. If you need to know the subtle difference refer here. Given so many confusing names used to refer to various credit fund schemes, the best way for us will be to check for the credit quality of the underlying portfolio and decide 😦

The chances of us getting attracted to credit funds is very high given 2 reasons:

  • Higher past returns compared to short term funds in the recent past
    credit opp returnsSource: Valueresearch
  • Expense ratios are higher and hence more incentive for advisors to sell these funds to usExpense ratios compared to short term funds are higher by atleast 0.5 to 0.8%.

Now the key is to understand the underlying risk behind the higher returns..For that we need to find the answer to a simple question.

What happens when some of the underlying borrowers get downgraded in terms of credit rating or worst case, default and do not repay the interest and borrowed amount?

For the purpose of understanding, let us hypothetically assume that, a credit fund has lent our money out to 20 corporate borrowers equally and has 5% equal exposure to each debt security. Now assume that the financial health of one particular company to which the fund has lent starts deteriorating and hence its chances of paying back its borrowing and servicing interest reduce. Usually the credit rating agencies evaluate this scenario and reduce the rating provided to the company. This is technically called a credit rating downgrade. To understand better, you can check the actual Amtek  Auto downgrade credit rating reports here and here.

This leads to an immediate price drop for the debt security of the company. Logic being lower rated papers will need to have a higher interest rate given the reduced rating and higher risk. But as the underlying interest payment for a debt security is prefixed, the prices of the debt security will have to adjust (in this case, decline to a certain extent) to match with the higher interest currently demanded by the new investor.

This is an impact on a paper which was downgraded from AA- to C. Below chart data is only for illustration purpose.

Ratings Downgrade Pricing impact

Source: Axis Mutual Fund Presentation (Link to presentation), CRISIL/ICRA.

Now while the exact decline in prices would be dependent primarily on the nature and severity of downgrade, going by past history, we will assume that approximately 30-50% of the debt security price will get eroded under a credit downgrade situation. This will mean that there will be a negative price impact of -1.5% to -2.5% in the fund (30% to 50% decline on a 5% allocation). Worst case if it is a default then the entire 100% of the security holding will have to be written off i.e 5% decline for the fund.

This risk is called credit risk and as seen above is very simple to understand. At the first look, it seems like an “ok” kind of risk to take provided we ensure that the fund is adequately diversified among many borrowers and the additional returns (which we get more often than not) are high enough to compensate for the risk taken. Credit downgrades and defaults are not very frequent. And even assuming the fund manager gets 2 calls wrong and has 2.5% exposure each, the overall downside may be around 1.5% to 2.5% on the NAV. But if everything goes right we end up making around 1-2% extra returns.

All fine till now. But unfortunately, there is another risk which we have forgotten to take into account. Liquidity risk. What the heck is that??. In simple words, it means that there are not enough buyers, so even if there is a price being theoretically quoted, finding a buyer at the quoted price is not easy (think of real estate).

This is precisely, in my opinion, the biggest issue when it comes to credit funds. Indian bond markets are still underdeveloped and most of the lower rated papers are extremely illiquid which means they are extremely difficult to sell in bad times.

Let’s listen to what the great investor Mr Howard Marks has to say about liquidity..

“Usually, just as a holder’s desire to sell an asset increases (because he has become afraid to hold it), his ability to sell it decreases (because everyone else has also become afraid to hold it). Thus (a) things tend to be liquid when you don’t need liquidity, and (b) just when you need liquidity most, it tends not to be there.”

If you have some time, do read his entire writing here . Trust me. It will be well worth your time.

Think of it this way. On one side you have the lender (that is us who have invested in the fund) who can take out money anytime and on the other side the fund has invested in a few illiquid debt securities which cannot be immediately sold off in the market. Now if due to some reason (generally a credit downgrade or default event) a lot us panic and decide to take our money from the fund you can imagine the plight of the fund. The fund may get stuck with the downgraded paper and be forced to sell its more liquid holdings as there is a rush to redeem units. And as the pace of redemptions increase, both its security selection and its portfolio concentration can go completely out of whack leaving the existing investors with a far more riskier portfolio for no fault of theirs. And there lies the crux of the entire problem!!

Let’s get back to our earlier example where the fund has lost 1.5% due to 30% decline in one debt paper which was earlier 5% of the overall portfolio (now the same paper would be ~3.5% of the portfolio). Generally, the biggest investors in debt mutual funds are the corporates. They have large treasury teams who are in charge of the investments and keep monitoring every fund day in and day out. Now they realise that 1.5% knock is fine, but if the paper defaults then it will lead to an additional loss of the remaining 3.5% in the debt paper. So they decide to take their money off. Now every other corporate and savvy investors do a similar sort of calculation and decide to pull off the money before the situation worsens. So suddenly there is a large amount of people removing their money from the mutual fund (called redemption pressure). Now the fund manager unfortunately is not able to sell off the downgraded debt security as its difficult to find a buyer even even at its so-called market value. So the fund manager has no choice but to sell the high quality debt papers which are liquid. Now assume the redemptions are large and almost 50% of the fund money is taken out (I am exaggerating but you get the point). Now all this while the dumb me who is also the investor in the fund remains blissfully unaware of all this happening and see my fund’s portfolio after a month. I am shocked to see that now I am stuck with not 3.5% of the original downgraded highly risky paper in my portfolio but rather 7% of the same security in the portfolio as the 50% of the liquid higher rated debt securities of the fund is already sold. And my existing fund portfolio looks a whole lot different with most of the high rated and liquid securities being sold off. Oh shit how unfair.

Relax. The fund house obviously realizes this and tries to address this by two ways

  1. Side Gate – The fund simply doesn’t allow anyone to take their entire money out. It puts a restriction on the amount an investor can redeem from the fund. Now if that sounds ridiculous and completely unfair. Read here to see what happened to two credit funds managed by JP Morgan when one of its debt security Amtek Auto got downgraded. And remember my rant about the corporates being the smarter and more resourceful guys. Go on check this link.
    Recently the market regulator SEBI obviously concerned by the proceedings, post this event, has put in a new rule that, even in case of a systemic liquidity crisis, no redemption requests of up to Rs.2 lakh can be subject to restrictions. For redemption requests above Rs.2 lakh, AMCs will redeem the first Rs.2 lakh without restriction while the remaining money can be subject to any restriction imposed by the AMC. Further, restrictions on redemptions can be imposed only for a specified period of time that cannot exceed 10 working days in any given 90-day period.


  2. Side pocket – The fund simply isolates the affected portion as a separate fund with a seperate NAV. So except for the affected portion you are free to redeem the remaining portion if they want. The proportion of investor money (in the scheme) linked to stressed assets gets locked until the fund recovers dues from a stressed company.

Out of these two options, “side pockets” seem like a better option as explained here. The argument goes like this – the side pocket concept would provide the required liquidity to the investor and ensures that their entire money is not stuck. Further it also ensures that the early sellers in the fund do not benefit at the cost of the remaining investors.

Now the only flipside is the subtle unintended consequences. A fund manager who knows that the side pocket option is not available will be forced to be much more prudent and aware of the risks he is taking. If the option of a side pocket exists, then the fund manager may venture out to take unwarranted higher risks to provide higher returns as anyway they can use a “side pocket” if something goes wrong.

For once, the regulator SEBI also seems to share my concerns and post the recent JP Morgan – Amtek Auto debacle has warned against the future usage of side pockets by Indian mutual funds (see here)

So adding to the problems, the funds from now on cannot use the side pocket option in future and the side gate option also has several new restrictions imposed by SEBI. This means the credit funds will find it more difficult to handle redemption pressures if at all it arises. And since the side pocket option is not there, investors will want to exit as fast as possible fearing possible “redemption freeze” scenario which ironically will only exacerbate the redemption frenzy. Phew.

Assuming you survived the post till here, the simple summary is that more than the credit risk it is actually the liquidity risk which is the real problem in credit funds.

Since these credit events are not very frequent, the bigger risk is that we may tend to under appreciate the very nature of risk!!

Now my thought process has always remained very simple. From heart I am an equity guy. All my chase for returns happens in equities. Debt funds personally has always been about safety. A few percentage plus or minus in debt returns, really doesn’t make a huge difference to me.

My primary usage of debt fund is a parking space for near term needs and as a part of my asset allocation strategy (i.e changing the mix of equity and debt based on valuations). So typically I will be needing this debt money desperately to buy equities when there is a crisis and equity markets have crashed (now whether I am able to pull it off in reality is a different issue). The last thing I want is for my debt fund to say that “Sorry boss, we have stopped redemptions due to a liquidity crisis”. Credit funds given their inherent structure have a high probability of getting screwed up in these scenarios. So my simple laymanistic reasoning being – why take so much tension for debt returns. As it is equities give me enough of it, but at least the long term payoff is worth the pain 🙂

As always, investing is a very personal thing and you are free to invest in credit funds but please ensure that you are not buying only because of the past returns and make sure you really understand the underlying risks (especially the liquidity risk).

Happy Investing 🙂