The Case For Long-Maturity Funds

One of the basic theories of money management is the time value of money. The longer you spare your money, the higher should be the rate of compensation, known as interest or coupon. When the yield curve is flat, you get similar or marginally higher rewards for investing your money for longer periods. While you get an interest or coupon for as many years, the rate remains similar in a flat curve. Currently, the yield curves are flat. There are multiple yield curves. The most relevant ones are government securities (G-Secs), which are yields on bonds issued by the government. The other is corporate bonds. The yield levels (the effective annualised return you get by investing) of corporate bonds are, in a way, based on the G-Secs curve, which is the most liquid and is of prime importance. Corporate bond yield curves are classified as per credit rating, such as AAA, AA, etc. Portfolio...