Aditya Birla Sun Life AMC’s MD and CEO A Balasubramanian on June 29 highlighted the growing opportunities in the bonds market by shedding some light on the interest rate movements.
Investing in equities through SIP is a must and tolerance to volatility has also gone up, he told CNBC-TV18 in an interview.
“But having said that, there was a period when interest rates were low, and today the rates are not low from investors’ point of view,” he added.
The 10-year bond yield is close to 7.55 percent and 5-year bond is close to 7.5 percent, - more or less a flat curve. In general, sovereign risk today is offering a very high rate of return.
According to him, in the last two years, there wasn’t any action and this year there is a continuous rise in interest rate. He said that the expectation of a hike is also now being factored into the bond curve.
“There is a growing appetite for the bond market, especially with the mutual fund schemes.”
He said that he sees revival at this point in time. The money managers should take a call on the market in which they should operate.
Clearly, as the expectation is getting built up globally, interest rates could be hiked by, say, 100 basis points. This will bring in opportunities for investors.