Recent report of CRISIL confirms that I have been guiding you in right direction. Smart money and HNI money have been flowing in long term debt and Gilt funds, anticipating further rate cuts by RBI. Rs. 25000 crore have been invested into Long Term Debt and Gilt funds in last quarter(Jan-March, 2013). Average debt assets rose by 35 % in Jan-March, 2013 quarter. Gilt funds assets rose by 63%.
1% cut in interest rate gives 10% returns on long term Government securities(Bond). I expect rate cut of min. 1.75% to max 2.75% in next 1-1.5 years. RBI’s such move offer returns on investment from 17.5% to 27.5% in next 1-1.5 years with absolute safety of capital.
My clients have earned absolute 30% returns on investment in 2008, when RBI slashed interest rates 2.75% in short span of 6 months.
Crisil Report – Economic Times
The Mutual Fund AUM (average assets under management) rose to 8.16 lakh crore as the end of Mar ’13 following huge inflows into the long-term debt and gilt funds. According to a report by Crisil, Long-term debt and gilt funds posted a sharp rise in their assets in Mar ’13 quarter due to inflows led by expectations that RBI would initiate monetary easing.
HNIs pump Rs 25k cr in debt in Q4; investors bet big on further rate cut – Economic Times
Corporates and high net worth investors have raised bullish bets on debt market securities anticipating further interest rate cuts by Reserve Bank of India or RBI. These investors have pumped Rs25,000 crore into long-term debt and gilt funds, primarily government bonds, during the March quarter, taking their outstanding investment tally to Rs93,300 crore.
"Assets of long-term debt funds rose by 35% to Rs85,500 crore, while those of gilt funds gained by 63% to Rs 7,800 crore, during the quarter ended March 2013, compare sequential December quarter. On a year-on-year basis, the assets of these categories have risen by 345% and 119%, respectively" said Jiju Vidyadharan, director, funds and fixed income research, Crisil Research. "Investor interest in the longterm debt category has risen lately, as debt market rallies when the RBI cuts key interest rates" Vidyadharan added. Bond prices and yields move in opposite directions. "There is lot of investor interest in debt funds among investors," said Dhruva Chatterji, senior research analyst, global funds tracker Morningstar.
If you have not read my earlier articles on this topic, click on link.
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