‘Continue With Short-Term Corporate Bonds:’ R Sivakumar, Axis Mutual Fund https://ift.tt/2vnGJ26

R Sivakumar, Head-Fixed Income, Axis Mutual Fund, feels that it would be safer for retail investors to continue with short-term corporate bonds owing to the latest repo rate hike by the RBI.

The RBI (Reserve Bank of India) MPC (Monetary Policy Committee) recently increased the repo rates by 25 bps (basis points) to 6.50 percent, maintaining a neutral stance, focusing on its inflation order.

The Axis MF’s Sivakumar recommended the retail investors to stay invested in short-term corporate bond schemes.

The market has estimated the result already and the fund house is encouraging investors to be in the market. However, the AMC support the short-end over the long-end of the yield curve. The flat yield curve implies that there is no extra yield to go for the longer duration.

So it bodes well to stay short in the case if the RBI shocks hiking more than anticipated, he said. The short-term corporate bonds and G-Secs are preferred because of these reasons, added the Head-Fixed Income of Axis Mutual Fund.

Lakshmi Iyer, CIO (Debt) and Head – Products, Kotak Mutual Fund, advised the investors to continue with credit funds and short-duration funds. She also feels that this is a shallow rate hike regime for India and that there is no reason for continuous rate hikes.

RBI MPC (Monetary Policy Committee) made the decision to raise the repo rates in its third bi-monthly monetary policy presented on August 01, 2018. The RBI, in its monetary policy review, hiked the repo rates for the second consecutive time in a period of two months.

Debt mutual fund investors are perhaps pondering about proceeding with their strategy. Bond yields, shockingly, fell by a few bps, and the bond costs went up, after the declaration of the most recent rate hike by the RBI.

Fund managers, who feel the recent interest rate hike cycle to be a shallow one, repeat that the investors must continue with short-duration funds and credit funds. However, the fund managers, who feel that the interest rate hike has peaked, recommend investors to consider long-term bond funds rather than short-term corporate bonds, reported DNA.

The post ‘Continue With Short-Term Corporate Bonds:’ R Sivakumar, Axis Mutual Fund appeared first on OWLT Market.

from OWLT Market https://ift.tt/2vnGJ26
via IFTTT