As we aware that RBI cut repo rate by 200 basis points – from six per cent to four per cent over the last one year.
“The cut in policy rates and abundant liquidity in the financial system has led to a crash in short-term interest rates and hence the mutual fund schemes investing at the short end of the yield curve are reaping low returns,”
Hence, Question is – Should you switch to ultra short-duration funds for parking your emergency corpus?
As you know that Ultra short duration fund portfolios typically have 3-6 months duration, Low duration schemes the period is 6-12 months. And liquid and overnight funds invest in securities maturing in 91 days and one day, respectively, interest rate risk is limited.
If you are ready to take risk and have specific time period to invest then our recommendations is go with Ultra Short Term Funds or Low Duration funds according to your risk profiling.
Also recommends investing in schemes backed by leading fund houses with a good track record and good quality portfolios. Additionally, we suggest you stick to larger schemes, as such funds are likely to be well-diversified and less concentrated.
You may visit our website www.agindiaonline.com for get best funds choice.