Where to park your money keeping rupee volatility in mind?
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In an interview to CNBC-TV18, Hemant Rustagi, Wiseinvest Advisors advises investors how to safely invest in the current volatile market environment.
Below is the verbatim transcript of Rustagi's interview with CNBC-TV18.
Q: What would you advice a retail investor. We are all going to see an impact on debt fund investments, fixed income fund investments. How should we react, should additional money not be put into these two funds and should we perhaps stick with fixed deposit?
A: The steps taken by Reserve Bank of India (RBI) had negative impact on the debt market; we have seen the 10-year government bond yield moving up from 7.60 percent to 8.05 percent. Therefore, considering the fact that the bond prices are inversely related to the bond yield, we are going to see negative impact immediately.
The most impacted will be the medium and long-term debt fund; these are the funds that follow duration strategy. However, another category of fund which has been very popular among the retail investor has been dynamic bond fund but fortunately there, as the bond yield move up from 7.10 to 7.60, most of the fund managers in this category have been actively managing their duration and also prune their government securities (Gsec) exposure. So, even though these funds are going to get impacted, the impact may not be as much as one will see in the duration funds and also considering the fact that any security, which has a maturity of 60 days or the residual maturity of 60 days, has to be mark to market. I think the impact will be there on short-term as well as even ultra short-term but of course the impact is going to be much more severe.
Therefore, my advice would be that all those investors who have invested especially in the last few months are the ones which are going to be impacted the most because they have already been seeing negative returns and now they will see a steep cut in terms of as far as returns are concerned.
Use liquidity crunch as bond buying opportunity: SBI MF
Q: As Navneet Munot, CIO of SBI MF was saying that rate cuts will start next year. Therefore, investors into dynamic bond funds should stay Put and not book losses maybe over 12 month period or 18 month period they will recover?
A: As I was mentioning, investors who have come in the last few months, looking at the last one year performance and also hoping that there will be rate cuts. If they stay Put for another 15-18 months and if they are willing to face or be ready to face the volatility that will come from time to time, I think they need to stay Put. I do not think it is a time for them to exit. However, for those investors who want to put fresh money can definitely look at short-term debt funds and also to consider funds that follow accrual strategy. I think this is a time to have a mix of different funds rather than going into dura
-------------------------------------------------------------------------------------------------
.jpg)
In an interview to CNBC-TV18, Hemant Rustagi, Wiseinvest Advisors advises investors how to safely invest in the current volatile market environment.
Below is the verbatim transcript of Rustagi's interview with CNBC-TV18.
Q: What would you advice a retail investor. We are all going to see an impact on debt fund investments, fixed income fund investments. How should we react, should additional money not be put into these two funds and should we perhaps stick with fixed deposit?
A: The steps taken by Reserve Bank of India (RBI) had negative impact on the debt market; we have seen the 10-year government bond yield moving up from 7.60 percent to 8.05 percent. Therefore, considering the fact that the bond prices are inversely related to the bond yield, we are going to see negative impact immediately.
The most impacted will be the medium and long-term debt fund; these are the funds that follow duration strategy. However, another category of fund which has been very popular among the retail investor has been dynamic bond fund but fortunately there, as the bond yield move up from 7.10 to 7.60, most of the fund managers in this category have been actively managing their duration and also prune their government securities (Gsec) exposure. So, even though these funds are going to get impacted, the impact may not be as much as one will see in the duration funds and also considering the fact that any security, which has a maturity of 60 days or the residual maturity of 60 days, has to be mark to market. I think the impact will be there on short-term as well as even ultra short-term but of course the impact is going to be much more severe.
Therefore, my advice would be that all those investors who have invested especially in the last few months are the ones which are going to be impacted the most because they have already been seeing negative returns and now they will see a steep cut in terms of as far as returns are concerned.
Use liquidity crunch as bond buying opportunity: SBI MF
Q: As Navneet Munot, CIO of SBI MF was saying that rate cuts will start next year. Therefore, investors into dynamic bond funds should stay Put and not book losses maybe over 12 month period or 18 month period they will recover?
A: As I was mentioning, investors who have come in the last few months, looking at the last one year performance and also hoping that there will be rate cuts. If they stay Put for another 15-18 months and if they are willing to face or be ready to face the volatility that will come from time to time, I think they need to stay Put. I do not think it is a time for them to exit. However, for those investors who want to put fresh money can definitely look at short-term debt funds and also to consider funds that follow accrual strategy. I think this is a time to have a mix of different funds rather than going into dura
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♥ Pulla Harsha Vardhan ♥
© pullaharshavardhan.blogspot.in ©
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