Debt funds are reaping the benefit of a rally in bond prices after the government’s demonetisation announcement.
In particular, income funds, dynamic bond funds and gilt funds have offered impressive returns over the past week. The one-week return for the gilt (medium to long-term category) is two per cent, while it is 1.26 per cent and 1.63 per cent in the case of income and dynamic bond funds, respectively.
And, fund managers are advising further investments in debt-oriented schemes, on an optimism regarding interest rate cuts. They expect the Reserve Bank of India (RBI) to cut its policy rate in December, as against earlier expectations of rate cuts in February.
