Rising bond yields have prompted investors to shift to debt funds of shorter tenure from long-duration products. And with oil prices expected to remain firm due to worries over rising political tensions in Saudi Arabia -the biggest oil exporter-bond yields are expected to rise further. Debt mutual funds that invest in longterm government bonds trade in them to benefit from a rise in prices.Dalal believes that if yields move up and you are invested in long-tenure gilt funds, you could see a mark-to-market loss of 4 per cent. "Assuming you have a coupon of 7 per cent, you will earn only 3 per cent if you stay invested for a year. Investors should book profits in long-term bonds or gilt funds and move into ultrashort term funds," he said.Market participants are worried about a slippage in India's fiscal deficit target of 3.2 per cent.

Source: Economic Times November 09, 2017 04:30 UTC