NEW DELHI, Nov. 6 -- India's debt mutual funds at the very short end have been unable to beat inflation since the start of financial year 2020-21. In longer-dated categories such as corporate bond, banking and PSU debt, medium duration and gilt, funds have captured gains from interest rate cuts on bond prices but the trend may be one-off. It may be difficult for these funds to replicate the gains in the future unless there are sharp cuts in interest rates or inflation goes down in a big way.
In April 2020, a nationwide lockdown sent debt markets into a tizzy. A flurry of redemptions in debt funds investing in risky papers led to the shock freezing of six schemes of Franklin Templeton Mutual Fund on 23 April.
RBI responded to this generali...