Why are NAV of my debt schemes falling? | Value Research Bond yields have gone up marginally in the recent past after the Reserve Bank of India kept interest rate cut on hold in its policy review last month
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Why are NAV of my debt schemes falling?

Bond yields have gone up marginally in the recent past after the Reserve Bank of India kept interest rate cut on hold in its policy review last month

I have invested in two debt mutual fund schemes of Birla Sun Life Dynamic Bond (direct plan) and Franklin India Templeton Short Term Income Plan on 14/08/2015. I have been observing that the NAV of these fund is decreasing. I could not understand why the NAV of these funds is decreasing if they are not investing in equity market.
- Yashbir

The two debt mutual fund schemes you have parked your money invest in bonds. The price of bonds is closely linked to interest rates and economic factors. Bond yields have gone up marginally in the recent past after the Reserve Bank of India kept interest rate cut on hold in its policy review last month. Yield and price of bonds are inversely related. This could explain why your NAV has fallen during this period.


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