Long-term portfolios poised to generate favourable returns
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Experts suggest investors consider betting on long-term debt mutual funds after the Budget for several reasons. The projected fiscal deficit for FY25 and the expected decline in gross borrowings indicate positive prospects for the bond markets. The Reserve Bank of India's consistent pause stance since April 2023 and the global bond inclusion will further enhance the flow to the debt segment, drive up demand, and bolster investor confidence. Investors should adopt a barbell strategy, allocating 40% of their funds into short-term options and the remaining into gilt-oriented funds with longer durations. Diversification across bond types, sectors, and issuers is crucial to spread risk effectively. Before investing in long-duration funds, investors should assess the fluctuation of yields and carefully consider the current interest rate environment and the risk of losses if rates rise. Comparing expense ratios and aligning investment goals and risk tolerance are also essential steps to ensure that investors select funds that suit their financial objectives and are comfortable with risk.

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https://www.financialexpress.com/money/mutual-funds-long-term-portfolios-poised-to-generate-favourable-returns-3384059/