Is this the right time to invest in US bonds? Kaustubh Gupta explains

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Key Points

Kaustubh Gupta, Co-head-Fixed Income, ABSL AMC, says If you are investing through mutual funds in the ETF route, the entire regulatory filings are taken care of by us and also we are not subject to any LRS cap..

Aditya Birla Sun Life Mutual Fund (ABSLMF) has launched two open-ended fund of funds, investing in US treasury bonds with maturities between 1-3 years and 3-10 years, respectively..

Second, at margin, we think the monetary policy hike by Fed has started to work on the US markets in the sense that when we are looking at the commercial bank loans, we are looking at the money supply growth, when we are looking at their mortgage rates, when we are looking at their labour markets, everything is pointing to a slowdown at margin, which means that we expect that Fed is very near to its peak rates, which makes sense to invest in US Treasuries...

It is available at cheap prices, we are near to the rate hike which is being done by the Fed and have added advantage of diversification in risk off, especially through currency as well and it makes a lot more sense both for tactical and long term investors...

As a matter of fact, in the last 20 years, the average Indian government bonds have traded closer to 7-7.5% and today also they are in that range but average US Treasuries they have traded closer to 2.5-3% and they are available at 5% which means that US Treasuries have lot of room to move downward compared to the RBI giving or enabling to ensure the financial stability Indian government bonds and which is why from that perspective as well it makes sense..

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