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SPOTLIGHT Manish Banthia Senior Fund Manager - Fixed Income, ICICI Prudential Mutual Fund

‘Shorter-duration accrual

products today make better

investments’

We speak to Manish Banthia about his
views on the debt market, the funds that

he manages, the yield curve and the fund
house’s risk-management practices,
among other things

What’s your view on debt markets and yield curve from
here on? Do you expect more rate cuts going forward?
When can we expect a rate reversal?
We don’t expect a rate cut, given the fact that the econ-
omy has rebounded out of the pandemic-caused slow-
down and the overall policy response both on the mon-
etary and fiscal sides has been very supportive. In the
Budget announcements made recently, the government
has prioritised growth over fiscal consolidation for the
next year as well, which clearly indicates that in the
future, we will see better growth numbers.
In terms of rate reversal, while we believe that in the
initial part, there may be some slack in the economy, it
is very difficult to pin-point exactly at which point the
rate reversal will happen. At some point, as the slack
in the economy gets covered, the RBI will need to
move back towards a normal interest-rate regime. The
current interest regime largely factors the pandemic
slowdown and interest rates will have to normalise at
some point in time.

What’s your advice to fixed-income investors from here
on? The gap between the trailing one-year returns and
the current YTMs is pretty wide.
The short-duration accrual products today make bet-
ter investments, given that we expect the RBI to start
rate reversal at some point in time. There have been
some adjustments in the market in the last one
month. We expect markets to be more volatile from
here and therefore products which can handle vola-
tility and with a reasonable carry and a shorter-dura-

22 Mutual Fund Insight March 2021
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