Investors should expect further interest rate hikes: Debt fund managers

On Wednesday, 10-year government bond yields ended the day at 7.4 per cent, against Monday's closing of 7.1 per cent

The Reserve Bank of India (RBI) on Wednesday made a surprise announcement by increasing the repo rate by 40 basis points (bps) to 4.4 per cent with immediate effect. Debt fund managers in the country say investors should expect further rate hikes and look to invest in money-market instruments, floating-rate funds, and target-maturity funds.  

“Debt mutual funds (MFs) will see a loss on Wednesday across the maturity spectrum. However, one can start investing in funds up to a two-year maturity, especially roll-down funds like TRUSTMF Banking & PSU Debt Fund, which will have a yield of 6.25 per cent now. Sep­tember