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As on: Jun 25, 2019 03:03 AM
In the near to mid-term, if OMOs are regularly announced it should be positive for bond markets
04-Jun-18   12:07 Hrs IST

Ms. BekxyKuriakose
In an interview with Anjali Raulgaonkar from Capital Market Publishers, BekxyKuriakose, Head - Fixed Income, Principal Mutual Fund said, Stick a to balanced asset allocation in various categories of debt funds while allocating to debt funds. In the current environment our top picks are Low Duration and Short Term funds with a topping of Corporate bond and credit Risk funds.

Excerpts:

  1. What are your views on fixed income market? How have the yields moved and which direction you see them moving in near to mid-term and why? What will the key driving factors for yields?
  2. Over the last six months yields have moved sharply across various asset classes be it money market, corporate bonds or gilts.  This is due to a variety of factors which are well known including the sharp rise in oil prices, rise in US treasury yields and Fed moving to hike path and supply concerns of local govt debt. Given this turn of events and recent FPI selloff in debt markets we see increasing likelihood that RBI may think of hiking rates and turning hawkish. GDP data to be released by end of month would be a key factor as well. Market would also takes cues from RBI's OMO announcements. In the near to mid-term, if OMOs are regularly announced it should be positive for bond markets and we should see yields stabilizing with downward bias even if RBI hikes key rates.

  3. What is your strategy for short term funds? What is your exposure to long term funds and why?
  4. Our Cash management fund and low duration fund invest primarily in money market instruments and short bonds as per investment objectives and SEBI guidelines for each of the categories. In Short Term Fund category we have the Principal Short Term Debt Fund. In the current market scenario we are keeping the portfolio average maturity in a modest range of 1.3-1.8 yrs with 90% plus exposure to good quality well rated short to medium term corporate bonds and money market instruments. A small exposure to short gilts is also taken as we see value in this segment with spreads in excess of 170 bps over repo.

  5. Have you made any changes in your funds after the Union Budget 2018-19? What and Why?
  6. Being actively managed debt funds, portfolio strategy and composition is reviewed on a daily basis. Post Budget there has been a wide range of impactful events both domestic and international and we have fine-tuned our portfolios in lines with changes in our view.

  7. What is your advice to the investors?

Stick a to balanced asset allocation in various categories of debt funds while allocating to debt funds. In the current environment our top picks are Low Duration and Short Term funds with a topping of Corporate bond and credit Risk funds.

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