Your fixed income portfolio to get higher potential returns

Mayank Bhantanagar, Chief Operating Officer, Finage

It looks like we are getting closer to terminal interest rates in the current hike cycle. Hence, the potential for capital gains in long-term debt funds has increased. To take advantage of this, fixed income investors can consider having a strategic allocation in GILT funds and debt funds with longer maturities, but with an understanding of the risks involved as they can be volatile in case of negative inflation surprises. Can A staggered entry into long-term debt is a better strategy than a lump sum investment.

Also, TMFs (Target Maturity Funds) with a residual maturity of 3-4 years can be considered. Most of them currently have a YTM of 7.4% to 7.6% with little or no credit risk, so one can be reasonably assured of earning these returns (pre-tax) over the next 3 years . Investors should be aware that TMF returns are not guaranteed and since their NAVs are marked to market, they will be subject to interest rate led volatility during this investment period.

Short term investors can invest in liquid funds now, as the tighter liquidity conditions will be positive for them as compared to a year or two ago. Liquid fund returns have already increased, with an average return of 5.7% in the last one year. We can expect this trend to continue for now.

Satyen Kothari, Founder & CEO, Cube Wealth

Fixed-income instruments can play an important role in building an inflation-proof portfolio and reducing market volatility. These instruments provide a predictable stream of income and can provide protection against inflation, helping investors beat inflation and maintain purchasing power over time.

Short-term bonds can be beneficial in managing the risk of market volatility and inflation. Compared to longer-term bonds, short-term bonds are less sensitive to changes in interest rates and inflation expectations, making them more resilient during times of market volatility and inflationary pressures, thereby providing portfolio stability.

Floating rate bonds are another option to combat inflation. These bonds have interest rates that adjust periodically, usually based on a benchmark rate. When interest rates rise, interest payments on floating-rate bonds increase, helping to offset the effects of inflation on purchasing power.

In addition, diversification across different sectors, geographies and credit properties can help spread risk and reduce the impact of market volatility and inflation on a portfolio. Higher-quality bonds, such as investment-grade corporate bonds and municipal bonds, are less sensitive to default risk, providing stability during times of market turbulence.

Regular portfolio review and rebalancing, along with seeking professional advice, can ensure that fixed income holdings align with an investor’s goals and risk tolerance, and provide a robust strategy to combat market volatility and inflation. Are.

In short, a well-diversified portfolio of fixed income instruments, including short-term bonds, floating rate bonds and high-quality bonds, can help investors weather market volatility, protect against inflation , and can preserve purchasing power over time, making them an essential component of an inflation-proof portfolio.

Remember, no investment strategy is foolproof, and investing always involves some degree of risk. It is important to carefully consider your risk tolerance, investment goals and financial situation before making any investment decision.

Prateek Vaidya, MD & CVO, Karma Global, a technology enabled HR and compliance organization

As I see it, it depends on two factors, one is saving for retirement and the other is preparing for some long term goal. Of course, again it all depends on the current financial situation and how much fixed income is desired at a later date based on current earning potential.

Some of the fixed term retirement options can be: One can accumulate good stocks in the portfolio or look at capital preservation or some bond holdings.

But there are good sides and not so good to every profitable transaction that we see from market perspective, however, in case of future fixed income, there may be interest rate risk, inflation risk, liquidity risk. In terms of interest risk, as we have seen currently with FD rates which were 5.50% p.a for last 2 years, some banks even offered 8.00% p.a., the interest rate is definitely a cause of concern due to price volatility There will be a reason. in the markets. Also, in case of inflation if it exceeds the amount deposited, the purchasing power will be affected.

There are also other instruments like Mutual Funds and Exchange Traded Funds, especially from trusted investment giant firms that have a lot of potential and offer various income investment solutions, but as said, there are risks associated with them and One has to be careful how you sort out your funds. , its reliability and returns to get the best return income for future retirement time on fixed basis.

What motivates people to look for a secure loaded retirement life is the fear factor which varies from person to person. People may wish to park for future due to personal risk or health risk or financial risk or change in governance and its policies.

I personally recommend that the safest bet would be to invest in low risk investments and savings options with guaranteed growth like fixed annuities, treasury securities and other high return government schemes.

Prateek Toshniwal, Serial Investor, Financial Advisor and Co-founder of IVY Growth Associates (India) | MI Capital (UAE)

To potentially maximize your fixed income portfolio returns, it is important to diversify your investments. This means investing in a mix of fixed income securities with different maturities, credit ratings and issuers. You can also consider investing in high-yield bonds or emerging market debt, which offer higher yields but come with higher risk.

Another strategy is to use a bond ladder, where you buy bonds with varying maturities evenly spaced over time. This strategy helps in hedging the interest rate risk and provides a steady stream of income. Finally, you may want to consider investing in ETFs or mutual funds that offer professional management and diversification. However, it is important to note that these strategies come with increased risk and you should consult a financial advisor before making any investment decision.

Babita Rani, Tax Consultant

Fixed income investment provides a fixed rate of return with interest earned over a fixed time period. Since they are less risky than futures and stocks, investors can use them to diversify their portfolios. Fixed income investments are especially preferred by elderly investors because their returns are dependable, and they provide a stream of returns on a set timetable. However, the reward may vary in size. Individual bonds are among the most popular varieties of this type of investment. Bond funds, post office savings schemes, corporate deposits, certificates of deposits, exchange-traded funds (ETFs) and money market funds are also included in this category. It is essential to understand that fixed income funds are only one type of fund within the mutual fund industry. Their projected profits and investment philosophy determine who they are.