Hardening yields to buoy debt MFs, experts recommend short-term maturities

Given the risk of high inflation, bond yields can harden further. However, current rates are attractive and provide good scope to start nibbling, say experts

The yield on the 10-year government security dipped on Wednesday even as the Reserve Bank of India (RBI) hiked the repo rate by 50 basis points to 4.90 per cent. In the earlier trading session, the 10-year g-sec had ended at a 40-month high of 7.518 per cent.

Experts say given the risk of high inflation, bond yields can harden further. However, the current rates are attractive and provide a good opportunity to start nibbling.

They say investors can look at investing in funds having maturity of 2-3 years and can also invest in dynamic bond funds, suggests fund managers.