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Debt funds pricing in a rate cut step up bets on long end of yield curve

By Economic Times - 4 weeks ago
Mutual funds have broadly stepped up their bets in longer-duration government bonds in 2024 as the likelihood of interest rates being lowered - even if with a slight delay - brings the prospect of reaping capital gains on sovereign debt. An analysis of public factsheets released by five large mutual funds shows a significant increase in modified duration and average maturity of gilt funds, indicating confidence that interest rates, and consequently bond yields are heading lower in coming months.

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