‘Investors should look at short-term debt funds’

By: | Published: February 8, 2019 4:43 AM

Investors should continue to look at short-term income funds in the current scenario and expects 10-year yields hovering around 7.15 percent -7.20 percent in the next few months

tax saving, tax saving for 2018-19, best tax saving options, PPF, NPS, ELSS, tax saving investments, tax saving investments 2018-19, tax planning for ay 2019-20, tax planning for salaried employees for ay 2019-20

The Reserve Bank of India (RBI), in its sixth bi-monthly policy, reduced the key repo rate by 25 basis points on Thursday. Fund managers expect that investors should stick to short-term income debt funds and not to embrace enter long-term debt funds yet.

Mahendra Kumar Jajoo, head – fixed income at Mirae Asset Global Investments (India), said, “RBI has taken a pragmatic approach and there is clarity in the communication which will help the markets. If things pans out in right way, I think we might see two more rate cuts in the next financial year.” Investors should continue to look at short-term income funds in the current scenario and expects 10-year yields hovering around 7.15 percent -7.20 percent in the next few months, he added.

On Thursday, 10-year benchmark G-Sec closed at 7.5 percent. There are a number of short-term debt funds such as liquid funds, ultra-short duration funds, money market funds and short duration funds. While short duration funds invest in debt and money market instruments where duration of portfolio is between one and three years. On the other hand, liquid funds, ultra-short duration funds and money market funds have instruments maturity of between 91 days and one year.

READ ALSO | Big Bull Rakesh Jhunjhunwala’s money mantra for retail investors

R Sivakumar, head of fixed income at Axis MF, said, “We do not expect long bonds to offer significant investment opportunities given the uncertainty around crude prices, the OMO calendar for the remainder of the year and possible front-loading of debt issuances in the next financial year.”

In the past one year, liquid funds category and ultra-short term fund category have given returns of 6.95 percent and 6.09 percent, respectively, show the data from Value Research. Short duration and medium duration funds have given returns of 6.25 percent and 5.55 percent in the last one year.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition