Don't want volatility in debt portfolio? Stick to shorter-duration funds

If you have a three-five-year horizon, you may invest in corporate bond funds and banking and PSU funds.

With the Reserve Bank of India (RBI) kicking off the rate-hike cycle in May, and more hikes expected, the one-month average return for most categories of debt funds has tipped into the negative. Many investors are choosing to flee debt funds. According to data from the Association of Mutual Funds in India (Amfi), short duration (Rs 28,483 crore), medium duration (Rs 3,973 crore), corporate bond (Rs 25,674 crore) and banking and PSU debt funds (Rs 17,285 crore) have seen considerable amount of redemption between January 1, 2022 and April 30, 2022.

Volatile times ahead

With inflationary pressures mounting, central banks