Float to Safety ; with Interest Rates in Turmoil, Income Funds Are a No-No. Floating Rate Funds and Liquid Funds Appear Better Bets for the Short Term.
Summary
Rising interest rates over the past year took their toll on income funds and their investors. The first half of the year was a veritable bloodbath with negative returns, but the second half saw a partial recovery with income funds averaging a 4-6 per cent return on the back of corrective steps taken by fund managers to check capital losses. Still, it's probably not the right time to put your money into income funds; you'd do better to look at other avenues. Here's a primer on how to reallocate your portfolio to maximise returns from your debt investments.
Fund managers are looking at short-term funds to tide over the current crisis. Says Nilesh Shah, CIO, Prudential ICICI Mutual Fund: "We have been recommending for the past few months that debt investors should look at short-term funds such as liquid funds/ floater funds/short-term bond funds." These funds largely seek to offer capital protection to investors. For those debt investors who want capital appreciation, Shah recommends monthly income plans (MIPs) that offer some equity participation as well.See the full content of this document
Extract
Float to Safety ; with Interest Rates in Turmoil, Income Funds Are a No-No. Floating Rate Funds and Liquid Funds Appear Better Bets for the Short Term.
Then, to handle an environment where interest rate...
See the full content of this document