Moneycontrol.com
After two cuts in key rates, Reserve Bank of India has opted to leave key interest rates unchanged in monetary policy review. Though this is not in line with the expectations of gilt fund investors, most fixed income investment experts advise investing more in gilt funds – mutual funds schemes that invest in government securities. "There is a possibility of further rate cut to the extent of 50 basis points this financial year, which makes it attractive to invest in gilt funds with one year view," says Ganti Murthy, head- fixed income, IDBI Mutual Fund. He is not the only expert betting on a interest rate cut in Indian economy. "From a macro perspective rate cut is imminent. At the current level it is an opportunity to invest in gilt funds to benefit from falling interest rates," says Devendra Nevgi, CEO, ZyFin Advisors.
Long term gilt funds as a category has delivered 16.4% returns, which has attracted many fixed income investors. As on February 28, gilt funds managed money worth Rs 13,180, says monthly data release by Association of Mutual Funds in India (AMFI). One year ago, for February 2014, this number stood at only Rs 6,481 crore. If you still have not invested in gilt funds, this is the right opportunity say experts.
"Previous rate cut of 25 basis points is yet to be transmitted in the bond yields. Current yield of 7.75% is a good entry point for gilt investors, as over next three months yields should soften," says Deepak Panjwani, head-debt markets, GEPL Capital. He expects the yields to soften by 25 t0 30 basis points by June. Inflation was a key concern of RBI and last two years RBI held on to high interest rates, to ensure that the inflation comes down to acceptable limits. RBI has made it clear that the consumer price inflation should be around 6 per cent by January 2016 and 4 per cent by end of 2017-2018. As inflation is no more a concern on the back of softening commodity prices, there is a fair chance that gilt fund investors get to ride a rally in bond markets.
However, do not be under the impression that it will be smooth ride, warn experts. US Federal Reserve has been keen on hiking interest rates, though the timing of it is not known. If it happens, global markets will react and it will impact both currency rates and interest rates in India. Though there is no clarity on timing and quantum of US rate hikes, one cannot totally ignore them. It may lead to intermittent volatility, though in the medium term domestic interest rates are expected to continue their downward journey. RBI is in a better position today as compared to couple of years back, to face a situation of capital moving out of the country if US rates move up, given higher currency reserve RBI has today. "As and when the US rate hike comes, and if domestic yields inch up, it will be another opportunity to buy gilt funds," says Devendra Nevgi.
Gilt funds make a lot of sense for risk-taking investors looking to ride falling interest rates. It is a pure play on interest rate movements, as there is little credit risk, given exposure to government bonds. Gains arising out of investments in gilt funds, held for less than three years, are taxed at marginal rate of tax of the investor. If held for more than three years, gains arising out of gilt funds, are taxed at 20% post indexation.
To know more about Gilt funds, Click here
Anda sedang membaca artikel tentang
Status quo on policy rates: Time to invest in gilt funds
Dengan url
http://sehatgayahidup.blogspot.com/2015/04/status-quo-on-policy-rates-time-to.html?m=0
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Status quo on policy rates: Time to invest in gilt funds
namun jangan lupa untuk meletakkan link
Status quo on policy rates: Time to invest in gilt funds
sebagai sumbernya
0 komentar:
Posting Komentar