Why fixed income remains a portfolio stabiliser during uncertain times
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- Anand Rathi data showed the Nifty declined about 4% over the past year while debt portfolios returned approximately 7-8%, underscoring fixed income's stabilizing effect during equity weakness.
- Harsha Vardhana VM, Founder and Group CEO of Atom Financial Services, said fixed income continues to support portfolios through geopolitical shocks, El Niño risks and shifting policy signals via contractual coupon payments and principal repayment.
- Vineet Agrawal, Co-founder of Jiraaf, recommends a diversified bond portfolio of G-Secs, AAA- and AA-rated bonds plus selective exposure to A- and BBB-rated investment-grade bonds, diversified across issuers, sectors and maturities.
- Harsimran Sahni, EVP and Head of Treasury at Anand Rathi Global Finance, advised maintaining exposure to lower-duration fixed income strategies to limit mark-to-market risk as rising crude prices and geopolitical tensions keep inflation elevated.
- Agrawal said a diversified bond portfolio built around G-Secs and AAA/AA-rated bonds could target an annual pre-tax yield of around 11%, though investors should evaluate issuer financial strength and security structure rather than chase coupons.
- Sahni recommended combining high-quality corporate bond funds, dynamic bond funds and liquid funds depending on the investor's time horizon and market outlook.
- Harsha Vardhana concluded that bonds should be treated as a strategic allocation rather than a tactical trade, with their stabilizing effect realized when held consistently through market cycles.
Why it matters: With the Nifty down roughly 4% but debt portfolios up 7-8% over the past year, retail investors get a concrete case study showing how fixed income cushioned a year of geopolitical and inflation headwinds; the experts' recommended ~11% pre-tax yield target on a diversified sovereign-and-AAA/AA bond mix gives investors a benchmark return path well above the debt portfolios' recent 7-8% realized return.
