Which mutual fund is better-suited in current markets for short term investors

Mutual funds investment: Amid hawkish central banks on interest rate hike, rising inflation and slowdown concerns, mutual fund investors require some tweak in their portfolio. According to investment experts, debt funds with short term view (not more than 2 years), is better-suited than equity mutual funds. 

Mutual fund experts said that equity markets is expected to remain under pressure in short term as RBI and other central banks are expected to further raise interest rates to tame inflation. They advised investors to move towards debt mutual funds as they may outperform equity funds by around 0.50 per cent to 1 per cent in short term. However, they maintained that the tweak is applicable only for those investors who have up to two years view.

Unveiling mutual funds investment strategy for short term, Dhirendra Kumar, CEO at Value Research said, “For any non-negotiable goal within 2 years, one should always consider a short-term or an ultra short-term funds.”

Echoing with Dhirendra Kumar’s views, Pankaj Mathpal, CEO & MD at Optima Money Managers said, “Debt funds or liquid funds for short to ultra short terms are better suited in current stock market as these options are expected to outperform equity funds by around 0.5 per cent to 1 per cent in short term.”

On returns that a short term mutual fund investor can expect from debt funds, Sandeep Bagla, CEO at Trust Mutual Fund said, “Liquid funds are likely to yield 4.75 per cent to 5 per cent returns with low volatility.”

On how to change the current market challenge into an opportunity, Vinit Khandare, CEO and Founder at MyFundBazaar said, “For a month’s investment or less, go for ultra-short term bond fund. For a month to a quarter’s investment, go for money market fund. The bond market is factoring a 200 basis points hike in repo rate in the next two years, with terminal repo rates at 6 per cent. One-year bond yields are trading in the 5.10 per cent to 5.20 per cent range.”

Asked about the debt funds that a fresh investor can look at while going for short term investment, Pankaj Mathpal of Optima Money Managers listed out 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 made above are those of individual analysts or personal finance companies, and not of Mint.

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