Latest portfolio disclosures show wide dispersion across fund houses. For instance, Nippon India Mutual Fund’s scheme is almost entirely invested in sovereign securities (around 97 per cent). In contrast, SBI Mutual Fund is skewed towards AAA-rated corporate bonds (nearly 68 per cent). ICICI Prudential and Bandhan Mutual Fund maintain a more balanced allocation across sovereign, AAA, and AA segments, according to March-end data from Value Research. Kotak Mutual Fund, meanwhile, has a diversified book with a meaningful exposure to AA-rated papers, indicating selective credit risk participation.
The sovereign bucket includes state development loans (SDLs).
The divergence comes at a time when debt markets are facing renewed pressure. Bond yields have risen amid global uncertainties, including tensions linked to the US-Iran conflict. Fund managers expect the pressure on yields to persist in the near term. “Long term yields would likely remain under pressure as the new fiscal year market borrowings start in a worsening external environment, along with less likelihood of near-term support from the Reserve Bank of India (RBI). While the curve should flatten over the remaining part of the rate cycle, further uptick across the curve is clearly likely. This provides a case for maintaining a lighter duration positioning,” SBI MF said its monthly debt outlook.
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