Debt fund managers reverse their bets on G-Sec

Are once again buying the asset class, according to Sebi data

India's debt fund managers have got into a reverse gear as far as making investments in government securities are concerned.

At a time when even bond markets failed to remain aloof from uncertainties with sudden abrupt changes in 10 year bond yields, debt fund managers, who had cut exposure in G-Secs in June, are once again buying this asset class.

According to latest statistics released by the Securities and Exchange Board of India (Sebi), fund managers increased their allocations to government securities by 33 basis points (one basis point is hundredth of a percentage point). With this, percentage of debt assets in G-Secs is back to above 9% at 9.01% or Rs 54,600 crore of the overall debt assets of 6.04 lakh crore as of July, 2013.

Interestingly, in June, fund managers had cut exposure to G-Secs by well over half a percentage point. However, within a month they had to revise the move and allocate more money into this asset class.

Majority of the allocated money in G-Secs is in the long duration of over a year time frame.

Sector officials told Business Standard that from a two years perspective gilt funds can still give a reasonable return of nearly double digit fron here on.

Over the last one year or so allocations to G-Secs have been increasing. At one point of time the exposure to government securities stood at a mere less than 2 percentage points.