Mar 2022 Economic Times
Mumbai: Investors looking to earn double-digit returns from their fixed income portfolio can consider an investment in the nonconvertible debentures of Piramal Capital and Housing Finance.
Mumbai: Investors looking to earn double-digit returns from their fixed income portfolio can consider an investment in the nonconvertible debentures of Piramal Capital and Housing Finance.
“With rising yields, debt funds are at risk of losing value”. Individual investors should not go for long term debt funds especially when the interest rate cycle is turning. Instead, they should opt for shorter duration debt funds or shorter term bank deposits.
We will have to wait and see if there are any major NPA issues in the books of non-bank financial companies (NBFCs) after the additional six-month window given to NBFCs to comply with asset classification norms, is over. So, the picture is not yet fully clear there.
Many platforms have cropped up in the recent past that have made it easier for retail investors to participate in the secondary bond market. There is the Reserve Bank of India’s Retail Direct Scheme, which allows them access to both the primary and secondary market for government securities (G-Secs).
Fund managers and investment advisors are recommending investors to square off their holdings in long-duration bond funds and gilt funds as bond yields are expected to firm up over the next year. The money could be reallocated to liquid funds or short-tenure bonds.
Wealthy investors are seeking higher interest income particularly when the stock market seems to have peaked for now. This has prompted many rich individuals to bet on perpetual bonds sold by credible public sector banks.
For individuals in the highest tax bracket, it makes every sense to invest in Bharat Bond ETF for a long-term capital appreciation. Under the current situation, an investor cannot expect any better post-tax yield in comparison to other popular options like a bank fixed deposit or tax-free bonds.
Investors can use a combination of government bonds and low expense passive debt funds to build a ladder for their portfolio.
In a rising interest rate cycle that we are now in, investors could have a higher allocation to shorter maturity products typically in the 3-5-year bucket.
Wealth managers are witnessing strong interest from non-resident Indians to open accounts under the new Reserve Bank of India scheme that allows retail investors to buy and sell government securities. We are receiving a lot of queries from our NRI investors across the globe, be it the US, UK, Singapore, or Dubai.
Retail Direct needs awareness among senior citizens who can benefit from it. GOI bonds can be an alternative to LIC annuity plans as retail investors can invest in the longest maturity until 2061.