High-Yield Bonds: Retail Investor Shift & Returns
- Mumbai's retail investors are increasingly turning to high-yield corporate bonds as the Reserve Bank of India's (RBI) repo rate cuts have pushed bank deposit rates lower.These investors are...
- Online Bond Platform Providers (OBPPs), registered with SEBI, are facilitating this shift, allowing investors to buy bonds online with investments as low as ₹10,000.
- According to Bondbazaar founder suresh Darak, direct investments in bonds can offer an additional return of 3-5 percentage points over fixed deposits.
Retail investors are actively shifting towards high-yield corporate bonds,seeking better returns than traditional fixed deposits. This trend is fueled by lower bank deposit rates, prompting investors to explore state-guaranteed papers and NBFC bonds, which offer attractive yields. Online Bond platform Providers (OBPPs) are simplifying the investment process, with options starting as low as ₹10,000. According to Suresh Darak, direct bond investments can boost returns by 3-5 percentage points, surpassing fixed deposits. Though, wealth managers stress diversification and monitoring company financials, essential for managing risk. News Directory 3 highlights that understanding the market dynamics is key. Consider the crucial advice on diversifying investments across diverse issuers and tenures. Discover what’s next in this evolving landscape of high-yield bond investing.
High-Yield Corporate Bonds Attract Retail Investors seeking Better Returns
Updated June 10, 2025
Mumbai’s retail investors are increasingly turning to high-yield corporate bonds as the Reserve Bank of India’s (RBI) repo rate cuts have pushed bank deposit rates lower.These investors are exploring state-guaranteed papers, NBFC bonds, and microfinance bonds, all of which promise higher returns than traditional bank deposits.
Online Bond Platform Providers (OBPPs), registered with SEBI, are facilitating this shift, allowing investors to buy bonds online with investments as low as ₹10,000. Platforms like Indiabonds, Bondbazaar, Grip Invest, and Wint Wealth are experiencing notable growth in traded volumes and user sign-ups.
According to Bondbazaar founder suresh Darak, direct investments in bonds can offer an additional return of 3-5 percentage points over fixed deposits. For instance, while State Bank of india offers a maximum of 6.7% for a 2-3 year fixed deposit, state-guaranteed bonds from Telangana, Uttar Pradesh, Kerala, and Andhra Pradesh with similar tenures could yield 9-10%.
Furthermore, AA-rated or lower NBFC and MFI bonds from companies like Muthoot Capital and Edelweiss Financial perhaps offer returns of 10-12%.
Direct investments in bonds can typically offer an additional return of 3-5 percentage points over traditional fixed deposits.
Investors may consider two-, three-year bonds, which balance yield potential with visibility on credit risk and interest rate movements.
Wealth managers recommend building a diversified portfolio of these bonds with shorter tenures of 2-3 years. Indiabonds.com cofounder Vishal Goenka noted the attractiveness of the 2-3 year maturity segment due to the steepening risk-free curve.
Darak advises diversifying across issuers, tenures, and ratings, suggesting no more than 10% investment in a single issuer.He emphasizes that investing across one to three years helps manage reinvestment and interest rate risk, ensuring a risk-adjusted fixed-income portfolio.
Wealth managers caution investors to monitor the financials and management track record of companies when buying high-yielding bonds, as they carry higher risk. Spreading risk by buying small quantities of these bonds is also recommended.
What’s next
As retail interest in high-yield corporate bonds grows, experts suggest investors carefully evaluate risk and diversify their portfolios to maximize returns while mitigating potential losses.