My debt fund is falling

One of the debt funds i hold is falling.
how to know what is the reason for the fall ?

Edelweiss NIFTY PSU Bond Plus SDL Index Fund 2026

Typically debt funds NAV falls due to two reasons

  1. Interest rates are moving up. As rates increases, price of bonds fall adn so does NAV of debt fund. This is very acute in long term bonds (Interest rate risk)
  2. Underlying bonds have defaulted or dropped in quality. Hence prices of specific bonda have fallen and Debt MF holding those bonds will see fall in NAV (Credit risk)

For Fund you have listed, it invests in Govt Sec and PSU bonds, so credit risk is minimal. But it still has interest rate risk. And as rates have inched up a bit in last couple of months, there might have been small drop in NAV.

However, this is a constant maturity fund (with all holding redeemed in 2026) so if you stay put till 2026, end return should be pretty much the same as indicative yield at begining.

4 Likes

thanks akash.

Well written thats correct.

Just a small correction.
The meaning of constant maturity fund is different.
I’d rather call Bharath Bond a close ended fund.

Cheers.

Thanks for compliment.

Not sure what you are implying but Bharat bond is a constant maturity fund and it is NOT a close ended fund. Instead it is a open ended fund.

This is how Edelweiss MF describes it

Hope this helps

My bad , I got confused . I actually meant fixed maturity.

Ok I see it now.
Yes, it is not a constant maturity fund. My bad.

It is fixed maturity, open ended fund.

US Fed has pinky promised to increase interest rate at every meeting in 2022. so 0,25% X6 increase expected.(US stagflation running at 10-15% compared to white lie official statistics of 2-5% ). Indiainflation is faring not too bad. but at some time our dear RBI has to increase rates by atleast 2 times this year x0.25% . so fd rate /lending rate may strengthen this year when all the covid support is with drawn bonds may fall (india 10 year rates may go above 7% minimum).!
world Govt 10 year bond yields !
It is a story of haves & have nots…!

Have nots: India is a gem comparesd to the banana republics below!!
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Haves (all ponji )