How Reinvestment risk will be avoided by investing in debt through mutual fund?

2 Answer(s)


Reinvestment risk is - a risk that an investment in a bond, will be paid off early and that the money earned may not be able to be reinvested in a security with a comparable return.

In a debt mutual fund, since the portfolio manager will reinvest the money in other comparable bonds in the portfolio and avoid the reinvestment risk.


see because in mutual fund case the portfolio manager is present to reinvest the money in other bonds therefore it avoid invtt risk