Mutual Fund Investments: Mutual fund investors need to make some changes in their portfolios amid concerns over hike in interest rates, rising inflation and slowdown by central banks. According to investment experts, debt funds with a short term view (not more than 2 years) are better than equity mutual funds.
Mutual fund experts said equity markets are expected to remain under pressure in the near term as RBI and other central banks are expected to hike interest rates further to contain inflation. He advised investors to move to debt mutual funds as they can outperform equity funds by around 0.50 per cent to 1 per cent in the short term. However, he added that this change is applicable only to those investors who have an outlook of up to two years.
unveiling mutual fund investment strategy For the short term, Dhirendra Kumar, CEO, Value Research said, “For any non-negotiable target within 2 years, one should always consider short-term or ultra-short-term funds.”
Echoing the views of Dhirendra Kumar, Pankaj Mathpal, CEO and MD, Optima Money Managers, said, “Short to ultra short term debt funds or liquid funds are better suited in the current stock market as these alternatives are around 0.5 per cent better than equity funds. The performance is expected to be 1 percent in the short term.”
On the returns that a short-term mutual fund investor can expect from debt funds, Sandeep Bagla, CEO, Trust Mutual Fund, said, “Liquid funds are likely to deliver 4.75 per cent to 5 per cent returns with low volatility.”
On converting the current market challenge into opportunity, Vineet Khandare, CEO and Founder, MyFund Bazaar, said, “For investments of one month or less, go for ultra-short term bond funds. One month to one quarter investments. For, go for money market funds. Bond market to hike repo rate by 200 basis points over next two years, with terminal repo rate at 6 per cent. One-year bond yields trade in the range of 5.10 per cent to 5.20 per cent are doing. “
When asked about debt funds that a new investor can look for while going for short term investments, Pankaj Mathpal of Optima Money Managers listed the following debt funds:
1]Aditya Birla Sun Life Money Manager Fund;
2]ICICI Prudential Short Term Fund;
3]Nippon India Short Term Fund; And
4]SBI Savings Fund.
Disclaimer: The views and recommendations above are those of individual analysts or personal finance companies, not Mint.