Opt for long-duration, gilt funds to gain from interest rate cuts

Go for the flexibility of dynamic bond funds if you are unsure about direction of rates

The Interim Budget sprang a positive surprise on the fiscal deficit front, infusing buoyancy in the bond markets and bringing bond yields down. The 10-year benchmark bond yield fell by 8 basis points to 7.06 per cent on February 1. Financial advisors believe that debt funds are in a sweet spot.

“The Interim Budget gave bonds a fresh lease of life as the fiscal deficit and the gross borrowing numbers came in lower than market expectations. The fiscal deficit for Financial Year (FY) 2024-25 has been projected at 5 per cent against market expectations of 5.30 per cent