Long-tenure gilt and dynamic bond funds shine on hopes of further rate cut

Long duration, gilt, and dynamic bond funds have outperformed in the 1-month and 3-month period

Two successive rate cuts in the past few months and expectations of further softening in the coming months have augmented the returns of long-tenure debt funds. 

Long duration, gilt, and dynamic bond funds have outperformed in the one-month and three-month period, increasing their one-year returns as well. In the past year, returns for long-duration, gilt funds, and dynamic bond funds stood at 12.7 per cent, 11.2 per cent, and 8.88 per cent, respectively — more than other debt categories. 

“The Reserve Bank of India’s open market operations and liquidity injection, along with two successive rate cuts, have helped the cause of longer