Short-term income plans are once again finding favour with investors in the new financial year.
This category of debt funds had come under heavy redemption pressure in February and March due to a choppy bond market and year-end balance sheet considerations.
Fund managers said while investors were still wary of putting money in medium-term bond and sovereign securities funds, they were turning to short-term income funds to take advantage of the steady fall in yields in the bond market since the start of the new financial year.
For instance, the assets under management of HDFC Short Term Plan were at 1211.40 crore rupees on April 17, up Rs 328.05 crore or over 37 per cent from Rs 883.35 crore on March 31.
Similarly, the corpus of Grindlays Super Saver Income Short Term Fund was at Rs 830 crore on April 17, up Rs 235 crore or nearly 40 per cent from Rs 595 crore on March 31.
Further, yields on the underlying portfolios of medium-term debt funds and short-term income plans have converged. This has aided to the inflows in the latter category as investors expect a similar return for a lower degree of risk.
