What should be the investor strategy on fixed income? Rajeev Radhakrishnan explains

economictimes.indiatimes.com:

Rajeev Radhakrishnan, Head-Fixed Income, SBI Mutual Fund, says “the bigger comfort from a fixed income perspective today is that a significant amount of tightening has already been done. Secondly, even when you look at a one-year ahead estimate basis on inflation, even if you assume the expected average inflation to be about 5.5%, fixed income yields today are anywhere between 7% and 8% depending on tenors. So a one-year T-bill today is trading north of 7%. We still have real returns available in fixed income instruments in India today. That, apart from the diversification angle that you did mention initially, would be the key investment points from the Indian fixed income angle. ”


A lot of data is coming in where investors are looking very keen on investing in fixed deposits and looking at the interest rate trajectory so far, where debt looks very attractive for all those investors who want to maybe rebalance their portfolio or have a debt exposure. But going ahead, what is the story that you see brewing because in India, if we talk about domestic triggers, inflation still remains a concern, monsoon is predicted to be a dampener in September also. Seeing the kind of situation that is emerging, what is likely on the interest rate front?
Coming to some of the factors you mentioned in terms of potential risk factors from a fixed income market perspective, we still have inflation which is fairly elevated and above the upper end of the policy target.

So that probably would be the near-term worry from a market perspective because from a policy perspective, what we have seen is over the last year or so, policy rates have actually gone from four to 6.5. But the effective tightening that the central bank has done is more than