Big questions on debt investing and how they impact you

India's entry into JP Morgan's bond index, rising interest rates, and the promising future of debt instruments have created a buzz in the debt markets. To make sense of it all, we spoke to four debt gurus - Suyash Choudhary from Bandhan AMC , Anil Bamboli from HDFC , Devang Shah from Axis , and Jalpan Shah from HSBC . Here, we simplify the insights gathered from our recent talks with these experienced debt fund managers. Important questions answered 1) Rates topping out In line with broader market sentiments, there is a consensus even among the fund managers we spoke to about the interest rates being either at their peak or very close to it. Implications for you Fund managers across the board believe that this is going to be the time of duration strategies. As mentioned in our category update , we can see fund managers extending their portfolio maturity (even our recommended funds) by increasing their exposure to longer-duration bonds. With rates at their peak, the capital appreciation from longer-duration bonds will help enhance these funds' returns. However, note that in case of an unexpected development, these funds can also witness volatility. Fund managers' thoughts Devang Shah: We believe that inflation and interest cycles have peaked everywhere. When it comes to rate hikes, we do not see major rate hikes from here on. We expect RBI to remain on a pause till March 2024 and expect ~50 bps of cut in CY2024. We believe that debt as an asset class can be attract

This article was originally published on December 05, 2023.