Is this the right time to invest in US bonds?

There has been a significant surge in US Treasury yields recently, prompting investors to consider the potential merits of investing in US Treasury bond funds. Nirav R Karkera, Head of Research at Fisdom, shared insights on this matter during an interview with CNBC-TV18.

He suggested that when examining the current interest rate landscape, it appears that we may be nearing a peak. This, in turn, presents a compelling case for investing in US Treasury bonds.

Karkera went on to explain that “The increase in yields and, all of this narrative around macroeconomic and geopolitical tensions spell out challenges for various asset classes. But when we talk about US treasury bonds at this point in time, we feel that the narrative may be slightly different and positive. The US Treasury bonds could be such a story at this point in time, considering everything that's happening and the outlook on the interest rate going forward as well.”

When asked about how retail investors can access US Treasury bond funds through the mutual fund (MF) route, Karkera highlighted the convenience of this approach. He noted that investing in these funds through the MF channel is as straightforward as investing in any other mutual fund.

Although there are options to invest directly in exchange-traded funds (ETFs), this would entail collaborating with specific brokers and dealing with associated charges and regulatory compliance requirements.

On the other hand, the mutual fund industry has made it simpler for Indian investors to gain exposure to US Treasury bonds. Karkera said, “Two asset management companies, Bandhan Mutual Fund and Aditya Birla Sunlife Mutual Fund, have introduced products that provide access to US Treasury bonds. These funds operate as funds of funds, primarily investing in ETFs that hold US Treasury bonds."

"Investors can participate in these funds by accessing their preferred intermediaries or directly through the asset management companies, making the investment process straightforward and consistent with their usual mutual fund investments," he told CNBC-TV18.