Bond markets have had a rocky start this year, with the yield on 10year government bond swinging wildly between 6 per cent and 6.5 per cent since January. While bond prices rallied sharply in the beginning of March (10-year bond yield at 6 per cent levels), they fell notably by mid-April (yield at 6.5 per cent levels). Over the past few sessions, bond prices have risen again (yield at 6.1 per cent levels), with RBI’s recent measures.
Such wild gyrations in bond yields have left investors in a lurch. Given that longer-duration bonds are more sensitive to interest-rate movements, investors in gilt funds have been feeling the heat.
Given the uncertainty over bond yields in the months ahead, volatility in gilt fund returns could persist.
And hence, long-duration gilt funds may not be for the fainthearted conservative investors.
Only investors with a long-term horizon of 3-5 years, with an ability to weather interim shocks can invest a small portion of their debt investments in gilt funds.
Uncertainty galore
The focus of the Indian bond market until as recent as February remained on domestic factors such as elevated inflation and understated fiscal deficit.
Denne historien er fra April 27, 2020-utgaven av The Hindu Business Line.
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Denne historien er fra April 27, 2020-utgaven av The Hindu Business Line.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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