Debt, Gilt Schemes & #8217; Navs Go Up

The net asset values (NAVs) of debt and gilt schemes have gone up significantly after Monday's bank rate cut.

Among the gilt funds, the schemes which have witnessed the highest appreciation are Tata Gilt Securities Fund-regular income option, Templeton India G-Sec fund-dividend and growth option.

Among the income funds, maximum appreciation was in the NAVs of Prudential ICICI Fixed Maturity Plan-half yearly growth option, PNB Debt fund-growth and Templeton India Income Fund-growth option. While the NAVs went up by 6 to 8 paise between last Friday and Monday, today the NAVs went up even further by around 3 to 6 paise across most schemes.

Income schemes have reported an increase in their NAVs with the increase ranging between 0.05 per cent and 2 per cent, almost across the board. Gilt schemes also showed similar appreciation.

With gilts at the longer-end maturities appreciating more than the short term papers, fund managers are already switching over to longer term papers in order to give the maximum to their investments.

Existing investors are expected to benefit from the appreciation in the value of their investments while new investors can still take advantage and enter the funds for future long-term gains.

Funds are also banking on banks and financial institutions cutting their deposit rates which will drive the hordes of the investing community into investing in mutual funds' income schemes, fund managers said.

For the past two or three months, liquid schemes have hogged the lion's share of the funds flowing into the mutual funds sector as in terms of returns they were seen to be better than the other categories of funds. Gilt funds have been doing pathetically for sometime now, managing to attract a few hundred crores every month.

The uncertainty in the finance sector also resulted in the investors showing a reluctance to lock in their funds for too long a time. So, most of the money which came into the MF sector was usually in the nature of `hot' money which would not stay put for long.