Market Strategy: How to structure Fixed Income portfolio in a changing interest rate environment?
Live MintIndian government bond yields traded higher on Monday, with the benchmark 10-year yield hovering around 6.7367%, driven by an uptick in U.S. Treasury yields. In light of these evolving interest rate dynamics, here’s how investors can structure their fixed-income portfolios effectively: Fixed Income Portfolio Strategy Motilal Oswal Private Wealth recommends maintaining an Overweight position on Accrual Strategies while staying Neutral on Duration Strategies in the current fixed income market environment. Motilal Oswal suggests the following breakdown: - 40%–50% of the portfolio should focus on Performing Credit & Private Credit Strategies, including InvITs and select Non-Convertible Debentures. - Tax-Efficient Fixed Income Alternatives To optimize tax efficiency, the report recommends allocating 20%–25% of the portfolio to Conservative Equity Savings Funds with a minimum holding period of 3 years. This portfolio strategy aligns with the evolving interest rate environment and seeks to balance return potential with risk mitigation.
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