Today on The MoneyMile, Surya Bhatia, Certified Financial Planner, is in conversation with Vivek Law on #INVESTINGIN2020. They are discussing interest rate cuts and their effects on debt funds. He says the performance of the debt fund will depend upon the quality of the portfolio you maintain on the debt side. The higher the quality, the lower the return. If you go for 100% AAA or 100% Banking and PSU, or a Corporate Bond, then the current interest rate is hovering at about a 7% average. Adding mark up on mark to market, depending upon how the interest rate moves, on the upside, the interest rate should be anywhere between 7.25-7.5%.
However, the interest rates can change depending on inflation rates. This is a good sign for the investor because, as of now it doesn’t look like the interest rates will come down from this point.
#debtfunds #portfolio #Interestrates
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