Despite Rates Volatility, SBI Mutual Funds Goes Long Cash

The country’s largest lender, SBI has been prompted to hold more cash. The disorder in bonds which recently disturbed the asset classes across the globe. Thus, SBI Funds Management is deploying funds in the overnight repo markets, Rajeev RadhaKrishnan, head of fixed income has stated that about $63 billion asset manager has also been minimizing the duration in its debt funds.

The U.S. Treasury yield curve steepened as the Federal Reserve Chair Jerome Powell stressed lately that the central bank won’t increase the interest rates until the U.S. economy shows tangible evidence it has fully healed from Covid-19.

However, certain fund managers turned wary of taking big positions in fixed-income recently, despite the speculation that vaccine progress could further escalate the inflationary pressure. However, in India’s case growing oil price are a particular risk given the country relies majorly on imports. A record government borrowing program has also pushed up yields.

In a statement, Rajeev states, "In such a volatile situation we'll continue with this strategy and take our time to redeploy the cash."

Moreover, the shift was already in the process. The latest factsheet reveals that SBI’s Dynamic Bond Fund’s cash holding increased to 32.5 percent by the end of January as compared to 8.4 percent at the end of June.