The largest investment fund in India in terms of managed capacity is to avoid exposure to ultra-long endurance debt, despite the fact that New Delhi reduces its offer, and prefers 5-to-10-year-old government bonds and shorter tenor Corporate Notes, said top management.
The government reduced the share of ultra-long bonds of 30-50 years for the second half of the tax year, while it increased the same for 5-year and 10-year bonds after suggestions between investor segments.
“This (supply ban) is a temporary solution,” said Rajeev Radhakrishnan, Chief Investment Officer of SBI Mutual Fund (Permanent Income), on Tuesday. The fund manages almost £ 3 lakh crore from debts.
Radhakrishnan sees the increase in solutions for long -term bonds as a structural problem.
The mismatch in supply and demand of long-term bonds was the result of several factors, including pension and insurance funds that increase share allocations and tax changes that affect debt flows in investment funds and insurance products, he said.
“Given the overall weak question and the fact that we may be at the late stage of the speed cycle, we would not want to be structurally overweight in the long duration and would rather be invested in the most liquid segment of the curve,” said Radhakrishnan.
The Veteran Fund Manager expects the Central Bank to keep stable on Wednesday, but will not exclude 25 BPS in December.
Radhakrishnan sees 1-3 years of corporate bonds such as a Sweet Spot, pointing to good spreads with returns of the government bonds, sufficient liquidity and an appropriate level of delivery.
Published on September 30, 2025
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