Rising yields, exposure to IL&FS' shrinking returns hit debt funds

Yields of 10-year government papers have surged 115 basis points to 7.91% , from 6.76% a year ago

Debt funds have had a poor run over the past year with the spike in yields and some schemes' exposure to IL&FS’ shrinking returns.

Liquid and ultra-short term funds emerged the top performers, with one-year returns of 6.7 per cent and 5.8 per cent, respectively. Dynamic and long duration funds, on the other hand, were at bottom of the pile, with returns of 1.7 per cent and 1 per cent, respectively, shows data collated from Value Research.

“The biggest factor has been duration; funds with the least duration have done reasonably well whereas long-duration funds have suffered from the spike in yields,"