ilmscore | Are Debt Mutual Funds at Risk? | CA Rachana Ranade

Are Debt Mutual Funds at Risk? | CA Rachana Ranade

Published: 2022-05-13
Status: Available | Analyzed

Predictions from this Video

Total: 8
Correct: 0
Incorrect: 0
Pending: 8
Unrated: 0
Prediction
Topic
Status
Central banks globally are increasing lending rates to control inflation, which is expected to lead to higher bond yields.
"central banks they are increasing the lending rate... if the lending rates are increased then typically the bond yields also increase"
Interest Rate Hikes and Bond Yields
Pending
Bond yields and bond prices have an inverse relationship: as yields rise, bond prices fall.
"the bond yields increase then the price of bonds that will go down so always remember the yield of the bond and the price of the bond are inversely related"
Bond Prices and Interest Rates
Pending
Rising interest rates lead to increased bond yields, which in turn decrease bond prices, causing the Net Asset Value (NAV) of debt mutual funds to fall.
"because of the monetary policies interest rates are increasing if interest rates are increasing bond yields will increase and bond yields will increase prices of bonds will decrease if prices of bonds are decreasing then debt mutual funds nav will also decrease"
Debt Mutual Funds NAV and Interest Rates
Pending
There is a direct correlation between the duration of a debt mutual fund and its risk: lower duration means lower risk, while higher duration means higher risk.
"liquid duration was very less and the decrease in nav was only 0.03 percent... the guild fund that we saw that had the highest duration and that is exposed to highest risk so remember this lower the duration lower will be the risk higher the duration higher will be the risk"
Duration and Risk in Debt Mutual Funds
Pending
Further interest rate hikes (possibly 0.5% or 0.75%) are expected in the short term, and this trend is likely to continue.
"it is expected that in this week or in the immediate next week whatever it is expected next month whatever in very short time coming uh short term it's expected that the second hike might come up be it 0.5 or be 0.75 we are not really sure on that but it's it is going to go on increasing that is for sure"
Future Rate Hikes
Pending
In the short to medium term, debt mutual funds are expected to experience some decline due to anticipated rate hikes.
"so in the short to medium term we do expect rate hikes we do expect that the mutual funds typically debt mutual funds might see some sort of downfall"
Debt Mutual Fund Performance Outlook
Pending
Investors who are currently in profit from their debt mutual fund investments and require the money in the short term should consider selling their holdings.
"if you have parked your funds and if you are in profits right now and if you need this money in the short term then ideally smartness can be in selling of the debt mutual funds"
Strategy for Debt Mutual Fund Investors
Pending
Investors with a long-term horizon (10 years or more) and who do not need immediate access to their funds in debt mutual funds are not advised to rush into selling.
"if you are a person who feels that i have invested barely 10 000 20 000 whatever this amount can be different i don't need that money right now i am ready to hold it for another 10 years also no problem such people need not be in a hurry and sell it off"
Long-Term Debt Mutual Fund Investment
Pending