Widely read:
A cut in interest rates has triggered a rush of investments in gilt funds. Since October 2012, gilt funds have witnessed an increase in inflows (See: Fresh investments). Gilt funds primarily invest in government securities and have seen a net inflow of Rs 2,409 crore in the past four months. This is not a new phenomenon as gilts are favourites whenever interest rates fall. The last time gilt funds experienced such a rush was in the FY08-09 when the rate interest rates were cut from a peak of 9 per cent to 5.5 per cent. Investments in duration assets in the long-term gilt category has gone up. Not to be left behind, three new funds – IDBI Gilt, Indiabulls Gilt and Morgan Stanley Gilt Regular – have been launched with a few more filed with Sebi. Investors in gilt funds are hoping for a further fall in interest rates to benefit from the cuts.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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