Investors in mutual fund debt plans, especially liquid schemes, may have to brace for more uncertainty with regard to returns as the Securities and Exchange Board of India may make it mandatory for these debt products to assign the latest market price to all their bond investments from April 1.
Currently, only debt papers with a maturity of over 30 days need to be valued on a mark-tomarket basis. Most fund houses value the rest of the papers based on amortisation.The shift is being undertaken to ensure the net asset value (NAV) of the fixed income schemes reflect the portfolio’s fair value. All categories of debt MFs including liquid funds and ultra short-term funds, which predominantly invest in debt papers with maturity below 30 days, will be impacted by the new method of calculation.