RBI rate hike by 25 bps: Should you lock into debt funds as bond yields rise? Axis MF outlines strategy for investors

The Reserve Bank of India (RBI) has raised its repo rate by 25 basis points to 5.5%, which could lead to higher bond yields. This could impact debt-fund investors, who may prefer high-quality corporate bonds with a duration of 1-3 years.

Investors are advised to gradually add duration as yields rise further, as this could provide better returns in the long run.

Axis Mutual Fund has outlined a strategy for investors to navigate this changing environment, suggesting that they should consider investing in corporate bonds with a higher credit rating.