VR Logo

Gains for Debt Funds

Euphoria generated by stock markets seeped into these funds too

A certain category of funds that doesn’t really have anything to do with stock markets too has come in the news. While the news is not earth shattering, but considering that the funds category is not known for generating huge movements in terms of gains, it is worth mentioning them as on the very day that Senses climbed in excess of 2,110 points, these funds too did well enough, perhaps catching the euphoria too.

What we are talking about is that the positive sentiment was seen not only in the stock markets, but in debt markets as well. The yield of benchmark GOI Papers closed at 6.26 per cent below previous close of 6.41 per cent. It touched an intra day low of 6.20 per cent, subduing the worries of an increase in the supply of government papers due to huge borrowing programme of the government.

This fall in the yield brought some gains for the debt mutual funds that invest in medium to long-term papers, although not to that significant an extent.

These (Debt medium-term and Gilt medium & long-term) funds turned in average category gain of 0.46 per cent on May 18, 2009. While there were funds that gained more than one per cent, five funds gained one per cent or more on the day. These were Fortis Flexi Debt Reg, Fortis Flexi Debt Reg A, Tata Dynamic Bond A, ICICI Prudential Gilt Investment PF and Fortis Bond Reg. Among these funds, apart from Fortis Flexi Debt Reg A, Tata Dynamic Bond A, whose maturity profiles are unavailable, all others were on the higher side of maturity with Fortis Flexi Debt Reg with the lowest maturity of 9.3 years.
Two funds, Reliance NRI Income and JM G-Sec Regular Plan, turned in negative returns of 0.02 per cent and 0.22 per cent respectively.

The yield of benchmark GOI paper is on a falling trend after it peaked at 7.09 per cent on March 30, 2009. The yield has come down 11.76 per cent since then till May 18, 2009.