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Asset Allocation Shifts To Corporate Debt And NCDs On Market Volatility And Fallling FD Rates


While elderly, among whom can be your parents, might have advocated investment in bank FDs to be their preferred choice, you as a young investor with a penchant for risk, might not be well compelled by the way returns on FDs are falling, and hence have been looking for alternatives.


Asset Allocation Shifts To NCDs On Market Volatility And Falling FD Rates

On the whole, there has been a lackluster demand for these NCDs with the waning demand from institutional investors, retail participation has been the highest. This is even when a host of these NBFC companies' coming up with NCDs faced serious liquidity crisis.
Also, the scenario is even more vigilant even when the bank deposits are considered to be the safest bet in such uncertain times in the equities, with the current mayhem that had seen Nifty crashing over 1000 points in as small a time as 2 months.

Further, the lapping up by retail investors of these NCD issues, is amid a scenario, when most NBFCs are facing a foul cry froma many of the banking institutions. But here in the new announcements made in a latest attempt by Sitharaman will bring in some respite for the NBFC sector.

So, investors in the wake of grim outlook of stock markets are heading on to fixed-income space and hence there is an increase in the demand for such products.
The retail share on subscription level is around 83% on average and going over 90%. "There is a healthy appetite for corporate debt from retail investors as such investments help diversify portfolio. Also, NCDs offer competitive rates compared to other fixed rate products such as bank FDs, and offer higher yields, while the risk is AAA," Rajiv Sabharwal, managing director at Tata Capital told PTI.

The investors have shown an increased interest in this product category on the premise that there has been a falling yield on bank deposits and negative returns on equities.

Read more about: asset allocation fd deposits ncd debt
Story first published: Wednesday, August 28, 2019, 12:38 [IST]
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