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Axis Mutual Fund’s Devang Shah: Debt Investments Aren’t Risk-Free
Debt investments can help make an investment portfolio steadier, but they are not all equally safe.
Their values and returns can be affected by interest rates, borrowers’ ability to repay, and how easily investments can be sold.
Devang Shah of Axis Mutual Fund says bond yields are around 7.5%, but that does not promise investors will earn 7.5%.
He expects inflation to average about 5–5.25% and anticipates the Reserve Bank of India may raise rates.
Investors should choose debt investments based on their goals, how long they can invest and the risks they can accept.
People planning for retirement may need income from fixed income as well as some growth investments to help keep up with rising prices.
Shah says investors should check a fund’s duration, credit quality and recommended holding period before investing.
Devang Shah says debt can stabilize portfolios but carries duration, credit, liquidity and reinvestment risks.
He expects inflation to average about 5–5.25% and forecasts RBI rate hikes, including a 75–100-basis-point rise over six to 12 months.
With bond yields around 7.5%, Shah says debt can contribute income and diversification, but yields are not guaranteed returns.
For retirees, he recommends high-quality fixed income alongside measured growth-asset exposure to support income and purchasing power.
He says investors should match debt strategies to their horizon and risk profile, assessing duration, credit quality and holding period.
- Who
- Devang Shah, head of fixed income at Axis Mutual Fund, discussed debt investing.
- What
- He explained the risks of debt investments and how investors can choose fixed-income allocations.
- Where
- The interview appeared in Livemint.
- When
- The interview was published as the Reserve Bank of India’s Monetary Policy Committee began its October meeting; the article does not specify the year.
- Why
- Investors are paying renewed attention to fixed income amid bond yields around 7.5% and possible changes in interest rates.
Traditional view
Shah’s view
Debt as a safe portfolio anchor
Traditional view
Debt is often treated as the low-risk or safe part of an investment portfolio.
Shah’s view
Shah says debt can stabilize a portfolio but is not a single risk-free asset class; different debt investments carry different risks.
Retirement allocation
Traditional view
The traditional approach is to move almost entirely into fixed income after retirement.
Shah’s view
Shah says retirees may need high-quality fixed income plus measured growth-asset exposure to generate income and preserve purchasing power.
Meaning of bond yields
Traditional view
Investors attracted by yields above 7% may expect those yields to represent their returns.
Shah’s view
Shah cautions that a quoted yield is not a guaranteed return; realised outcomes depend on rates, maturity and the securities held.
Key facts
- Interviewee
- Devang Shah, head of fixed income at Axis Mutual Fund
- Bond yields cited
- Around 7.5%
- Inflation outlook
- About 5–5.25% on average over the next four quarters; 5.25% for FY27
- Rate-hike forecast
- 75–100 basis points over the next six to 12 months
- Retirement horizon discussed
- Potentially 25–30 years
- Investor example
- A 40-year-old with a 10–15-year investment horizon
- Risks identified
- Interest-rate (duration), credit, liquidity and reinvestment risk
Sources
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