debt funds: ETMarkets Investors’ Guide: Amid churn in bond market, which debt funds should you invest in? | The Economic Times Podcast

While equity market has been extremely choppy over the past few weeks, bond markets have also seen a fair share of volatile moves, largely dictated by surging inflation and RBI’s frantic attempts to tame it.

The one direct impact of rise in bond yields in recent months is the adverse impact on net asset value (NAV) of debt mutual funds. We have already seen outflows in the month of May because of that.

ETMarkets’ Shubham Raj caught up with Marzban Irani, CIO – Debt, LIC Mutual Fund, to decode the happening on Mint Street and their impact on bond markets.

The money manager believes RBI may keep rates eventually in the range of 5.5 to 6 per cent. He also believes floating rate bonds are good investment ideas but for a mutual fund manager low liquidity may be a problem. He also talked about government finances, among other things.

Listen in!

Q. What is the terminal repo rate that you are expecting and by when that can happen?

Q. Since RBI has given inflation projection assuming oil at $105/barrel, is there a risk of it overshooting projection as crude is maintaining at $120/barrel?

Q. RBI has reiterated its pledge to reducing liquidity. What is the outlook for short term bond, say less than 5 year maturity, which are more sensitive to liquidity conditions?

Q. Govt has increased fertilizer subsidy. Can this lead to fiscal slippages and in turn more borrowing going ahead?

Q. Increasing yields are bad news for debt investors, but is there some safe corner? What end of the yield curve would you suggest investors to pick right now?

Q. Is floating rate bonds a good investment idea right now?

Thank you Shubham and Mr Irani for a very intriguing conversation.

That’s all in this week’s special podcast. Do keep checking this space for more interesting content and take time out to follow our market podcasts twice every day. Stay safe and Happy Weekend!