Debt MFs prune exposure to G-secs

Debt-fund managers have drastically cut allocation to G-secs over the past six months

Debt-fund managers have drastically cut allocation to government securities (G-secs) over the past six months.

At the end of April, debt-mutual funds (MFs) held government paper worth Rs 1.13 lakh crore, 8.9 per cent of debt assets under management (AUM).

Six months ago, debt MFs’ G-secs holding stood at Rs 1.62 lakh crore — nearly 14 per cent of debt AUM.

The pruning of exposure to G-secs owes itself to the belief that the interest rate cutting cycle by the Reserve Bank of India (RBI) is nearing an end. 

Fund managers are increasing their exposure to corporate paper. They are