When the year 2018 began, there were two events that were being looked forward to. The first was the Union Budget and the second was the last monetary policy of the current fiscal year. Both are gone and the question now is what it means for debt fund investments. While we understand the budget impact on stocks market 2018, not too many people have focused on the impact on debt markets and debt funds. So, what are the investor expectations in 2018 from debt and debt funds? First, a look at the key indicators impacting debt funds..
Debt funds predominantly invest in government bonds and private sector debt and are largely dependent on the movement of interest rates in the economy. Additionally, factors like the government borrowing program and fiscal deficit estimates also have larger implications for the returns on debt funds. When you combine all these factors, what does it look like in case of debt fund investors in 2018? Here are 4 factors to consider..
Keep an eye on oil prices globally..
You may wonder what impact global oil prices may have on bond fund returns but the relationship is quite strong. For example, global oil prices have rallied sharply since the middle of June 2017 after bottoming out around the $45/bbl. In fact, oil has already touched $70/bbl in the early part of 2018 before settling around the $65/bbl mark.
