Why it makes sense for you to minimise exposure to longer-duration funds

Investors should have only a 10 per cent allocation to longer duration funds; fixed-deposit investors should go for shorter-term deposits

Compared with its previous day close of 7.43 per cent, the yield on the 10-year government bond shot up to 7.60 per cent by the end of the Budget day (February 1). Since then, it has come down a little to 7.56 per cent. At its current level, however, it is more than 100 basis points higher than the low of 6.40 per cent, where it stood on July 24 last year. With the benchmark bond yield hardening, investors need to recalibrate their fixed-income strategy to deal with a changed environment.

Several factors were responsible for the bond yield shooting