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.
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
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
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