The interest of investors in debt funds is increasing very fast. Especially in funds maturing in six months, including liquid and ultra short periods. There has been tremendous investment in these categories of mutual funds in July. This is the highest investment of the last three months.
73,700 crore investment in short term fund in July
Debts funds were the most invested in the month of July. In July, Rs 73,700 crore was invested in liquid and ultra short duration funds. According to the Association of Mutual Funds of India (AMFI), this is the highest investment for the last three months.
Experts believe that one of the reasons for the increase in investment in debt funds is the status quo on bank rates by the RBI. In the MPC meeting of RBI last week, there was no cut in key bank rates including repo rate. However, a member of the policy committee believed that these should be cut. But there is still inflationary pressure on RBI.
Why is investing in short term funds increasing?
According to Bloomberg, Arun Kumar, Research Head, FundsIndia, says that investors want to play safe bets by investing in short-term mutual funds. Investors believe that interest rates will increase in the next one or two years. When this happens, the longer the tenure of the fund, the more negative is the impact.
Investors have the option of early exit by investing in short duration funds. Especially given the uncertainty in the policies of central banks, their money gets locked in long-term mutual funds for a long time. In such a situation, the buying towards funds gets reduced.
Krsnaa Diagnostics IPO Shares Allotment Today, Here’s How To View Your Status, Expert’s Opinion On Listing Strategy
Investors changed strategy under pressure of inflation
31,470 crore was invested in mutual funds maturing in three months in view of inflationary pressure and RBI’s policy. At the same time, Rs 20,900 crore was invested in money market funds. According to the data of Association of Mutual Funds of Association, Rs 1,733 crore was sold from medium to long term funds. There was a sell-off of Rs 47.2 crore in 10-year government bonds.