I was recently quoted in The Hindu Business Line (26 Nov 2022) in an article titled “Debt fund yields turn attractive at both short- and long-ends“.
Here is the link to the online version of the article – Link
Since the article is behind a paywall, here are the points that I made in the article –
Dev Ashish, a SEBI-registered RIA and founder of Stable Investor, says, “Given the current environment, it’s best for investors to stick to debt funds with shorter durations like liquid, money-market and ultra-short-duration funds. This approach during periods of rising rates has generally worked well as one can look at reasonably good returns without taking a lot of interest rate risk.”
Ashish also adds that those with goals 3-5 years away can consider the newer target maturity funds matching with this horizon, which are also offering attractive yields.
“We might be close to the top of interest rates, but we are not yet there. Those looking at debt allocation for their long-term portfolio can consider a small allocation to gilts with a 10-year constant duration. But the investor should then be willing to take short-term pain due to MTM (mark-to-market) losses in the near future. But if the time horizon is shorter, say, just a few years, then it is best to avoid longer-duration funds completely for now,” says Ashish.