INSUBCONTINENT EXCLUSIVE:
Debt funds have been out of favour for close to two years now
But with equity markets turning volatile, yields rising, and the rate hike cycle forecasted to near its end debt funds may again draw
At the end of January, the YTMs of popular medium-term debt schemes like corporate bond funds and short-duration funds touched an average of
the last one year are also working in favour of debt funds, according to investment advisors
business officer, SBI MF.
Major banks have raised fixed deposit (FD) rates to around 7 per cent, which is similar to what medium-horizon
debt funds are offering post expenses
However, debt funds have an upper hand in taxation
Long-term investment in debt funds is taxed at 20 per cent with indexation benefits, while gains from bank FDs are taxed as per the
This month, a lot of my clients have shown interest in deploying money in longer horizon funds as they expect the rate hike cycle to end
added incentive to invest in debt funds right now
said.
However, the rising investor interest is unlikely to change the fortune of debt funds
While retail and HNI investors are once again warming up to debt schemes, the flow of investments from institutions may continue to run
strong inflows into debt funds will come only after the rate cut expectations start to build in
The US economy is faring well and if the inflation persists, the rates can even go up in the US
