Invest bulk of debt portfolio in funds that have 2-5-year average maturity

Avoid exiting from the category as most of the pain caused by rate hikes is behind us

 Debt mutual funds have seen outflows in four of the past six months ending January 2023. Cumulatively, they have witnessed outflows worth Rs 27,473 crore over this period, according to data from the Association of Mutual Funds in India (Amfi). In January, they lost assets under management worth Rs 10,316 crore.

While liquid and overnight funds (which corporates enter and exit according to their needs) accounted for the bulk of outflows, other categories too have lost funds.

One reason is that the Reserve Bank of India (RBI) has been hiking the repo rate since May 2022. “Investors withdrew money from