Trump tariff: As a retail investor, keep your eye firmly on your goals and asset allocation
The Reserve Bank of India’s (RBI) monetary policy committee (MPC), as widely expected, left the repo rate unchanged on August 6 but on the same day US President Donald Trump announced an additional 25 percent tariff on Indian goods on top of a similar duty for importing Russian oil.
The double-tariff blow has investors nervous about what it means for the Indian economy and also export-oriented sectors such as textiles.
The global economic and geopolitical turmoil have prompted investors to constantly monitor their equity portfolios. In the rapidly changing scenario, they will also have to monitor the fixed income component in their portfolios closely.
“There is a view that the Trump tariffs have the potential to shave up to 20-40 basis points off India’s projected GDP growth for FY26. While this is bad news for equity markets, that’s not necessarily the case with the fixed income space. It could be a positive for bond markets as the primary criteria for the RBI cut rates is inflation followed by GDP growth. Lower projections could pave the way for rate cuts,” said Joydeep Sen, a corporate trainer (financial markets) and author.
Also read: Trump’s 50% tariff shock: Is it time to increase your gold, silver exposure?
The RBI’s rate pause was widely expected. Moneycontrol’s poll of 17 economists, bank treasury heads and fund managers had indicated that the RBI will hold the rates steady. “In June 2025, post 50 basis point repo rate cut, RBI governor Sanjay Malhotra had indicated that the rate reduction was frontloaded,” Sen addded. The repo rate remains at 5.5 percent.
According to Synergee Capital managing director Vikram Dalal, the RBI holding the rates steady will mean that the 10-year G-sec yield will remain rangebound.
As a retail investor, you should keep your eyes firmly on your goals and asset allocation, say financial advisers.
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“In debt funds, the evergreen rule is that the average maturity of the portfolio should align with your investment horizons. So, if you need the funds in one-two months, you should look at liquid funds. If your horizon is three years, invest in short duration funds, and opt for gilt funds if your goal is longer-term in nature,” Sen said.
Within the fixed-income space, you can consider several alternatives. For example, you can look at 8.05 percent RBI Flexi Rate bonds. “Other than that, they can also tap secondary markets for debt instruments that offer higher-than-FD returns. State-guaranteed bond papers floated by state-owned enterprises and states like AP, Kerala, TN, UP and so on. These can potentially yield over 9 percent returns (YTM) with quarterly interest payout,” Dalal said. He also recommends PSU bank and short-term debt funds as also longer-tenure G-secs that offer yields of 6.2-6.3 percent.
Also read: Amid Trump tariff storm, should you pick multi-asset, sectoral or flexicap mutual fund?
The constant market noise and volatility notwithstanding, focus firmly on your portfolio and requirements. “Overall, keep things simple — your portfolio should consist of equities for growth, gold as a portfolio diversifier and debt for stability,” Sen said.