RBI measures to improve returns of debt MF schemes, help liquid schemes

Yields to soften, liquidity steps to help liquid funds meet redemption pressures

Debt fund managers are expecting sharp gains from their portfolios, following the 75-basis-point (bp) cut by the Reserve Bank of India (RBI). In addition, they expect to be better-positioned to handle any redemption pressure in liquid schemes, with the central bank pushing lenders to bring liquidity into the corporate bond market.
 

“The move will re-value debt portfolios of existing investors, as yields soften,” said Dwijendra Srivastava, chief investment officer (fixed income), Sundaram MF.
 

Yields in the short-term bond market — which had seen liquidity drying up of late — reduced by 150-200 bps on the back of the RBI’s Rs