New Delhi, March 20 -- In uncertain times, such as periods of war, the basic strategy is to stay diversified across equity, debt and gold. Returns from equity and gold depend mainly on price movements, which are harder to predict. That makes them more volatile.

Debt works differently. Most of the return comes from the coupon, or interest-known as accrual. In debt mutual funds, price movements can add to or reduce returns, but accrual remains the main driver. In the current environment, it is important to look at debt with this perspective.

When a central bank cuts rates, bond yields typically fall. Since bond prices and yields move in opposite directions, falling yields lead to price gains, which add to accrual returns in debt funds. Th...