Debt schemes with large investments in long-dated papers, especially in the government of India securities (G-Secs), will be hit the most by rising bond yields. Simply put, if your debt scheme's portfolio has a higher average maturity, its NAV would be prone to fluctuations as bond yields creep up in the coming days.
Lakshmi Iyer, CIO- (Debt) & Head - Products, Kotak Mutual Fund says, "Gilt funds and dynamic bond/income funds typically have the most exposure to such type of bonds and hence would be most impacted in a rising yield scenario."