Tipping point: Despite good performance, don't bet on long-duration funds

At a time when returns from most categories of debt funds have been in the single-digit, one category whose returns will surely catch your eye is long-duration funds. These funds run an average duration of above seven years in the portfolio. 

 

 

Despite their good performance over the past year, most advisors are not advising people to invest in them. 

Government borrowings could rise, causing a spike in yields of long-term bonds. Hence, investors should stick to debt funds with average duration up to three years.