Originally Posted by hiren
Thanks Prudent Investor.
Why do you think gilt funds wouldn't be appropriate? The gilt funds were suggested by a respected finance professional on his blog & hence the query.
I have very good experience with choosing equity funds however the knowledge on debt side is lacking.
Do you suggest lump sum investments in debt funds or sip mode looking at gradual decrease in interest rate cycles?
Thanks once again.
I suggested dynamic bond funds as a better option. Never meant that gilt funds wouldn't be appropriate.
Even if you look at the examples of 3 funds in the post, you will see all have GOI securities as more than 50% of the portfolio.
Playing the longer term without GOI securities, we do not have that much depth in our debt markets.
The main catch here is when will be the rate cut from RBI, if you know that for sure, play it out with Gilt funds as the appreciation will be immediate.
Else trust the fund manager of the dynamic bond fund to change positions according to interest rate cycles for maximum benefit.
I choose to do the latter.
Most of these funds have hefty lock-in, hence lumpsum is always a preferred mode of entry. Also SIP is particularly suited for equity because of high volatility and expected downside, both of which are missing in debt funds.
Do share your strategy if you are playing this with Gilt funds.