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Fund Managers Prefer Debt to Equity

Published: Aug 24, 2013 06:39:19 AM IST
Updated: Aug 22, 2013 02:53:04 PM IST

In any market condition, investing in debt is considered a safer alternative to equity. But a falling currency and the intervention of the RBI has affected the returns on debt funds in the country. Forbes India asked three fund managers if this is the right time to invest in debt markets. This is what they said.

Fund Managers Prefer Debt to Equity
Once the volatility in the rupee is under control, the RBI will refocus on growth by easing interest rates, leading to a fall in yields and a rise in bond prices. Income and gilt funds are long-term options;  short maturity funds and fixed maturity plans work in the short to medium term.
–Rahul Goswami
CIO, Fixed Income, ICICI Prudential AMC

Fund Managers Prefer Debt to Equity
Dynamic bond funds offer the best option for a long-term allocation. Current market interest rates are higher than those offered on comparable fixed deposits. Hence, a tactical allocation into medium-term FMPs or dynamic bond funds can be considered.
– Arvind Chari
Sr Fund Manager-Fixed Income, Quantum Mutual Fund

Fund Managers Prefer Debt to Equity
As a result of the RBI rate hike, yields have risen to levels last seen in mid- to end-2012. However, macro-economic fundamentals like growth and inflation are substantially weaker. As these are reversed, bond yields will fall again, leading to gains for fixed income investors.
– R sivakumar 
Head, Fixed Income, Axis MF

(This story appears in the 06 September, 2013 issue of Forbes India. To visit our Archives, click here.)

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