Fixed income is gaining attention among Indian investors as yields rise, according to fund managers at the Morningstar Investment Conference 2026. Devang Shah of Axis Mutual Fund said entry levels are "very, very good." Experts now favour short-duration funds and corporate bonds, though they warned against trying to time the market.
Fixed income is gaining renewed attention among Indian investors as rising yields and strong corporate credit create a more favourable entry point, according to fund managers speaking at the Morningstar Investment Conference 2026.
The 10-year government bond yield has climbed from 6.15 per cent in June 2025 to around 7.18 per cent, while the rupee trades at 96-97 against the dollar. Devang Shah, Head of Fixed Income at Axis Mutual Fund, said entry levels are "very, very good," though investors may not see capital gains in the near six months. He advised adding duration once the first rate hikes are in, unless the cycle turns deeper than expected.
Fund managers favour shorter duration
Sunaina Da Cunha, Co-CIO (Debt) at Aditya Birla Sun Life AMC, currently favours liquid and short-duration funds, shifting to 2-3 year corporate bonds once volatility eases. She noted that corporate bond spreads up to five years look attractive, and that companies entered this cycle having deleveraged and strengthened balance sheets during the previous rate cycle.
Manish Banthia, CIO of Fixed Income at ICICI Prudential AMC, flagged a global rotation from equities into bonds but pointed to India's shallow corporate bond market as a structural concern, citing inefficient taxation that keeps retail investors away from non-AAA paper.
Managers caution against market timing
All three managers cautioned against market timing, stressing that matching the investment horizon to fund duration and maintaining the right asset allocation matter more.