Average maturity of debt funds declines in Q4: Report

The average maturity across debt fund categories has come down during the fourth quarter of the past financial year due to the high interest rate environment prevailing in the country, a report by mutual fund research firm Morningstar said today.
"Debt fund managers toned down the average maturity across all duration products during the quarter ended March," the report said, adding "fund managers consciously kept average maturity lower as the economy continued to see high interest rates."
The report also said that consistent decline in average maturity period indicates fund managers' belief of no reduction in interest rates in the near-term.

In the light of high retail inflation, RBI has maintained status quo in the key policy rates in the last policy. Market participants also don't expect easing in the monetary policy in near future.
As per the report, average maturity of long-term government bond funds declined from 11.36 years in January to 8.46 years in March, while intermediate government bond funds declined from 8.65 years to 7.50 years during the same period.
However, the report said average maturity period of shorter duration products had increased during the last quarter of the past fiscal.
"It can be inferred that fund managers are foreseeing an interesting opportunity at the shorter end of the yield curve," the report said.