It might have short-term pain but sure long-term gains. Going forward we expect improvement in Governments fiscal position, increase in System Liquidity, further fall in inflation, and positive impact on growth over medium to long term with near term hiccups.
We have been positive on Indian bonds for a while now with the view that monetary easing cycle will continue and better liquidity in the banking system will push bond yields lower. With the Governments latest announcement of de-monetizing higher denomination notes, our view further got strengthened. We expect further easing in terms of 50-75 bps of rate cuts in the near future.
Despite of all the volatility in the recent years, our Active Fund Management strategy in Long Duration Fund like Reliance Dynamic Bond Fund has paid off. The strategy to differentiate Tactical Positions from CORE Positions has paid off and we continue to re-iterate that it should be the right strategy going ahead in the current market scenario.
In light of the above facts and expectations we would continue with our high duration strategy in this fund and feel that the investors with the preference for active duration management along with an investment horizon of 3 years and above can consider this fund which would benefit on further easing of yields
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