Alternative investment funds (AIFs) are launching credit-risk products for sophisticated investors via close-ended funds. Besides higher returns, there’s stability in the funds’ corpus in case of a possible credit-risk default, which results in panic redemptions. The opportunity is big, as mutual funds shy away from credit risk, but borrowing appetite remains.
The performing credit risk market is gaining traction. For the longest time it was dominated by mutual funds — known to lend to companies that enjoy decent credit ratings. It was a market with few lenders and many borrowers. But over the years, the demand for credit has gone up, especially from small and mid-cap companies in the unlisted space, where mutual funds never really established a strong presence. Most mutual funds operate in a market
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