Bandhan Bond Fund Short Term Plan: Attractive investment option in current interest rate scenario

The interest rate scenario has been favourable for debt funds over the last one year or so. After a fairly long period during which the RBI held repo rate flat at 6.5%, the central bank did two rate cuts this year (CY 2025). The first rate cut of 25 bps was announced in the February Monetary Policy Committee (MPC) meeting and the second cut of 25 bps was announced in the April meeting. In the last 6 months Government Bond yields have fallen 50 – 80bps across different maturities (source: worldgovernmentbonds.com, as on 11^th May 2025). Falling yields is favourable for debt fund investors since bond prices have an inverse relationship with yields – bond prices rise when yields fall and vice versa.

Why the interest rate scenario is favourable for short duration funds?

The chart below shows the yields of Government Bonds across different maturities (yield curve) and how they moved in the last 12 months. You can see that the yield curve not only shifted downwards, but it has also steepened considerably – with the biggest fall in the 1 to 3 year range.

Source: worldgovernmentbonds.com, as on 11^th May 2025

In the current scenario, the curve is steepening as short-term yields are declining faster than long-term yields, driven by strong demand for short-term bonds. Higher demand for short term bonds and supply in line with market expectations (Government announced Rs 8 lakh crores of borrowing in first half of FY 2025-26) are pushing up bond prices and causing yields to decline.

The chart below shows the 3-year bond yield movement in the last 12 – 15 months. You can see a sharp decline in yield in the last 2 months. This trend may continue if RBI continues to cut repo rates. Slowing Index of Industrial Production (IIP) growth, cooling inflation and a weakening US Dollar are creating conditions for the RBI to do more rate cuts in the coming months and quarters.

Source: worldgovernmentbonds.com, as on 11^th May 2025

Bandhan Bond Fund Short Term Plan

This is a short duration debt fund. As per SEBI’s mandate the portfolio Macaulay Duration of short duration funds must be in the 1-to-3-year range. The Macaulay Duration of the fund portfolio is 3 years (Modified Duration of 2.89 years) and Average Maturity of 3.69 years*. The Yield of Maturity of the portfolio is 7.07%*. The fund has a vintage of nearly 25 years.

*As on 31^st March 2025, Bandhan MF Fund Factsheet

Outperformed the category average

You can see that the fund outperformed the category average over different periods.

Source: Advisorkhoj Research, as on 11^thMay 2025

A consistent upper quartile performer

Bandhan Bond Fund Short Term Plan has been in the top 2 quartiles, 7 times in the last 10-11 years. It is currently ranked in the Top Quartile and the top performer on a YTD basis.

Source: Advisorkhoj Research, as on 30^th April 2025

Very high credit quality

100% of the fund portfolio is in highest quality papers i.e. Sovereign (G-Secs, SDLs) or AAA / A1+.

Source: Bandhan MF Fund Factsheet, Advisorkhoj Research, as on 31^st March 2025

Why invest in Bandhan Bond Fund Short Term Plan?

• Current interest rate scenario is favourable for short duration funds


• The yield to maturity (YTM) of the fund is more attractive than interest rates of traditional fixed income (e.g. Bank FDs)


• Relatively low-interest rate risk


• High credit quality


• Bandhan MF historically has a very strong track record in the fixed income asset class (debt mutual funds)

Investors should consult their financial advisors or mutual fund distributors if Bandhan Bond Fund Short Term Plan is suitable for their investment needs.