Ramakrishnan says categories such as short duration schemes, corporate bond funds and banking & PSU
On Friday, the RBI announced 40 basis points (bps) cut on repo rate
to four per cent, while keeping room open for more easing measures.
“If the inflation trajectory evolves as expected, more space will open up to address the risks to growth,” RBI governor Shaktikanta Das
said in his statement.
"Liquidity and rate cut are positive for shorter-end of the curve. The domestic g-sec yields have come down, but here yields will also be dependent upon weekly supplies. In the short and medium-term space, there is more scope for further compression," said Lakshmi Iyer, chief investment officer-debt, Kotak MF.
“While duration is attractive given wider term spread and when compared to nominal growth rate expectations, sustained performance here is still dependent upon the unveiling of a credible financing plan from the RBI for the enhanced borrowing program of the sovereign (government),” said Suyash Choudhary, head-fixed income at IDFC MF.
expect yields to remain elevated at the longer-end of the yield curve in light of government’s borrowing plans.
The government recently raised its borrowing estimate for FY21 to Rs 12 trillion from the earlier estimate of Rs 7.8 trillion.
“From an investment standpoint short bonds are likely to see opportunities across the short bonds space as the rate cut is likely to reflect in a lower yield to maturities (YTM) across the curve. We continue to retain our positioning across all debt products
and continue to favour high-quality short-term strategies,” said R Sivakumar, head-fixed income at Axis MF.
In April, corporate bond funds and banking & PSU debt fund were among the few debt categories to see positive flows.
Corporate bond funds garnered Rs 4,168 crore of flows, while banking & PSU debt received net inflows or Rs 6,561 crore.
In one-year period, corporate bond fund has given returns of 7.2 per cent, while banking & PSU debt fund has given returns of 8.14 per cent. Short duration schemes (that invest in 1-3 year-debt papers) have given returns of 5.59 per cent in one-year period.