Only savvy investors should enter into floating-rate funds: Analysts

Select a debt fund whose average duration is lower than the investment horizon

Interest rates could harden in the near future. One category that can protect investors from the price volatility seen in most debt funds in such a scenario is floating-rate funds. Ten fund houses currently offer them and have cumulative assets under management of Rs 69,730.9 crore. The new fund offer of Tata Floating Rate Fund, which closes on July 5, is also underway.

Rates could rise   

Consumer Price Index (CPI)-based inflation has risen over the past six months. It stood at 6.3 per cent in May, crossing the Reserve Bank of India’s comfort zone.

Commodity and fuel prices have