InvestorQ : What is the current outlook for Long Term Debt and Gilt Debt funds? Considering that these categories have done well for the last few months, is it a good idea to buy these funds now assuming that RBI interest rate cuts continue?
Dharmarajan Sitaraman made post

What is the current outlook for Long Term Debt and Gilt Debt funds? Considering that these categories have done well for the last few months, is it a good idea to buy these funds now assuming that RBI interest rate cuts continue?

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varsha Motwani answered.
1 year ago
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What is Long Term Debt? Long Term Debt is categorized under non-current liability on the company's balance sheet. A long Term Debt instrument is issued by corporations and governments to secure fresh funds or capital.

Should you invest? Long Term Debt is quite known for delivering double-digit returns. This instrument will benefit you as it is invested in Government of India Bonds and Corporate Bonds of long term maturity. In my opinion, debt fund must be invested for than 10 years for average maturity.

What are Gilt Funds? Gilt Funds are invested in government securities of the medium. You can opt gilt fund for investment if you are a risk-averse. If you are looking for a long term investment then the gilt fund would be suitable for you. You can expect 11-18% returns.

Should you invest? Not just due to low-risk investment but the gilt fund is recommended as it is invested in the country's infrastructure building and other government expenses.
Coming to your second question regarding the impact on long term debt investment and gilt fund through RBI rate cut, I do not think it will make any significant difference to your investment. The upcoming third RBI rate cut of the FY can be low or high, however, the market expects high rate cut this time. Thus, if you are planning for a long term investment it won't affect negatively to your investment.

Should you rush to buy long term debt and gilt funds? I would say No. It is always advisable to make small allocations with a mild exposure in your diversified portfolio.
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