SBI Pension Fund to boost state bond buying as supply grows and returns rise

SBI Pension Fund plans to buy more state government bonds to earn higher returns as market supply increases. The $64 billion fund is using a strategy focused on steady income through state and corporate debt. It also wants to buy more large-cap shares while keeping a careful eye on how long its bonds take to mature.

Expert Advice

Devang Shah, who leads fixed income at Axis Mutual Fund, spoke to ETMarkets about the market. He advises investors to build up their fixed-income holdings slowly and stick to safe, high-quality choices. He points out that crude oil prices, global interest rates, and cash flow levels can cause sudden price swings in the bond market.

Context

State government bonds are issued by individual states in India to raise money for public projects and budget needs. Pension funds often buy these fixed-income assets because they offer steady returns that help pay out retirement benefits over long periods.