Invest in long-term debt? Dynamic bond fund managers on the fence

With the interest-rate hike cycle nearing its end, is it the right time to shift debt allocation to longer-duration papers?

Mutual fund (MF) managers are divided on this.

In November, nearly half the dynamic bond fund (DBF) schemes raised the allocation to medium-to-longer-duration papers, while the rest either increased allocation or kept the overall duration of the portfolio unchanged.

DBFs are debt MF schemes similar in concept to flexi-cap funds in the equity space. DBF managers have the flexibility to switch allocations between shorter and longer maturity papers depending on the interest-rate cycle.

An analysis of the portfolios of DBFs