The month of August saw debt fund investors get a jolt with many categories that had been posting double-digit returns suddenly entering the negative territory. The lower-than-expected GDP numbers and GST collections with persistent high inflation indicates upward pressure on yields.
The immediate action by the Reserve Bank of India (RBI) to contain the spike in yields in August, besides its efforts to maintain adequate liquidity, signals that yields may not move up significantly despite the pressure. However, the period of easy gains in debt markets may also be over. Is this situation a cue for investors to relook at their debt fund portfolios?
