The past few days have been gut wrenching for debt fund investors. With bond yields shooting up after the RBI policy, the NAVs of debt funds went into a tailspin on 8-9 February.
The average medium and longterm gilt fund fell 2.5% in two days, wiping out the gains of almost the past 2-3 months. Other categories such as dynamic bond funds, income funds and short-term debt funds also fell, though the decline was not as steep.
The RBI decision to leave rates unchanged had had come as a surprise. But the bigger shock was the change in the RBI stance from “accommodative” to “neutral”.
