This can, in turn, affect debt mutual funds because their returns increase when interest rates fall and vice-versa. This gives the percentage change in a debt funds’ value in relation to the percentage change in interest rates. Investors in long-dated funds may benefit from a further fall in yields as a result of Operation Twist. \Risks to considerBefore jumping to buy long-dated debt funds, consider some risks. RBI’s Operation Twist holds out some relief to investors in long-dated debt funds and the National Pension System, the debt funds in which tend to hold long-maturity bonds.

Source: Mint December 30, 2019 00:22 UTC