Avoid chasing yield blindly in scenario of falling interest rates

Give equal weight to safety so that you avoid loss of capital in your fixed-income portfolio

Following a 50 basis points rate cut by the Reserve Bank of India (RBI) on June 6, banks have lowered their fixed deposit (FD) rates by 25-50 bps. While investors should explore better-yielding options, they must not compromise on safety.

 

Debt funds

 

Debt mutual funds (MFs) have delivered better returns than FDs over the past couple of years amid softening rates.

 

The repo rate now stands at 5.5 per cent. “The RBI has suggested that there is not much scope for further rate cuts. This means the duration strategy, which has been performing for the past two years, may not