Most debt categories shine in 2012, give above 9% returns as bonds rally
The number of FMP launches declined from 483 in the first half of the year to 151 in the second half, while fund mobilisation dipped from R78,948 crore in the first half to under R8,000 crore for the five months ending November. Fund houses had rushed to launch as many as 315 FMPs between January and March in anticipation of a decline in interest rates. The returns of ultra short-term funds and FMPs are likely to get negatively impacted if the RBI goes ahead with rate cuts in its upcoming policy meet, according to experts.
“There will be a small window of opportunity for FMP investors in the next two months, as seasonal liquidity tightness take short-term yields higher. After March, FMPs won't remain attractive as short-term yields are likely to fall,” said Maneesh Dangi, co-chief investment officer, Birla Sun Life AMC. Ultra short-term funds gave returns of 9.4% in 2012 against 8.9% in 2011.
Long duration funds will benefit from rate cuts. “Funds focused on corporate bonds should continue to do well. Besides, investors could also consider long-dated gilt funds, but should be ready for short term volatility owing to changes in oil prices and currency,” said Santosh Kamath, CIO, fixed income, Franklin Templeton Investments. According to Mehta, duration products carry higher risks and volatility, and long-term FMPs may attract money from
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