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What 2024 Holds For Debt MFs

Outlook Money

|

February 2024

There are expectations that Reserve Bank of India RBI) will cut interest rates in 2024, following the US and Euro zone rate cycle reversal

- JOYDEEP SEN

What 2024 Holds For Debt MFs

Returns in debt funds come from two avenues. One, accrual which means the coupon or interest that accrues on the instruments in the portfolio. Two, prices of the bonds and/or other instruments that move up or down in the market. The accrual, which is accounted in the net asset value (NAV) every day, is a given. It happens without any conditionality; it happens irrespective of market conditions. It is the market movement that adds to it (if bond prices move higher) or takes away (if bond prices move lower) to the daily accrual in the portfolio.

Recap: 2021 And 2022

These two years were marked by yield levels in the market moving up. Bond yields and prices move inversely, and hence market-related components were impacted adversely. While the coupon accrual in the portfolio was very much there, down-tick in prices was taking away from the accrual. To recall the background why yields were moving up, it started from yields dropping significantly when the Reserve Bank of India (RBI) cut interest rates till 2020 to support the economy. From the very low levels, interest rates had to eventually move up. RBI's rate hike cycle started in May 2022. However, interest rates in the market started moving up from 2020-end. This was due to multiple reasons: high inflation, high fiscal deficit leading to borrowings from the market, and anticipation of rate hikes by RBI.

As an indication, the 10-year benchmark government bond yield was at a low of 5.82 per cent in December 2020, and it started inching up from that level since then. Even before the RBI rate hike cycle started in May 2022, it crossed 7 per cent in anticipation of rate hikes.

Recap: 2023

FLERE HISTORIER FRA Outlook Money

Outlook Money

Outlook Money

Gold vs Real Estate: What You Should Know

Both gold and real estate have long been preferred investment choices for Indians. They hold sentimental value, too. We compare the two and assess if one or both assets can complete your portfolio

time to read

7 mins

October 2025

Outlook Money

Outlook Money

Strategic Vs Tactical Allocation

Fixed-income investments can be bucketed based on your time horizon. However, you can also tweak the allocation, tactically, in accordance with the market conditions

time to read

4 mins

October 2025

Outlook Money

Outlook Money

Discipline Is Key, Shows This Retiree's Life

Pramod Agrawal, 64, a former banker, is an inspiration for active retirees who do not know what to do with their idle time post retirement. Pramod, who lives with his spouse in Ghaziabad, had the option of staying at home, like most retirees, but chose to use his expertise in new ways. Now, he is a visiting faculty at several institutes.

time to read

4 mins

October 2025

Outlook Money

Outlook Money

Will The E20 Fuel Rollout Make The GST Benefit Ride Bumpy?

The GST rate cut will benefit most car and two-wheeler buyers, but the E20 fuel rule may upset your budget. Calculate well and plan ahead for a smooth ride

time to read

6 mins

October 2025

Outlook Money

Outlook Money

Input Tax Credit In Insurance

Health insurance premiums in India have become more affordable after the government removed the 18 per cent goods and services tax (GST) on them.

time to read

2 mins

October 2025

Outlook Money

Regulatory Roundup

A few regulatory changes in September 2025, and how they will impact you

time to read

4 mins

October 2025

Outlook Money

Frugality: A Smart Money Move

We often equate frugality with penny-pinching behaviour. But it isn't. It is about being smart with money, and spending it on things that give value and satisfaction

time to read

5 mins

October 2025

Outlook Money

Here's How To Make Health Insurance Claims

For many people, health insurance is the safety net that prevents a medical emergency from turning into a financial burden. Yet, policyholders often find themselves confused while filing claims.

time to read

1 mins

October 2025

Outlook Money

Outlook Money

Why Seniors Need To Know Their Legal Rights

Many senior citizens often end up in destitution after being abandoned by their kith and kin, typically after transferring their property. Can taking recourse to laws meant for seniors lend a helping hand?

time to read

5 mins

October 2025

Outlook Money

Advantage Of Low Cost, High Returns

If you want to stay away from the constant game of chasing outperformance or worrying about underperformance, exchange-traded funds (ETFs) can be a smart option. They provide broad market exposure, are cost-efficient, and eliminate the need to time the market. An index ETF allows you to invest in sectors and stocks of the underlying benchmark in the same proportion as the benchmark. If you want to invest in Nifty 50 companies, Nippon India Nifty 50 BeES could be a decent choice.

time to read

1 mins

October 2025

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