Bet on money market funds for a horizon of 6-12 months: Should you invest?

For longer periods go for corporate bond funds or banking and PSU funds

With interest rates hovering close to their long-term average peak levels, there is an unexpected performer on the block: Money market funds (MMFs). In recent times, these funds have beaten several other popular categories of bond funds, including banking and public sector unit funds (BPSUFs). MMFs (direct plans) have produced a category average return of 6.93 per cent return over the past year, outdoing BPSUFs (6.84 per cent), and performing almost on a par with corporate bond funds (or CBFs, 6.96 per cent). Do MMFs merit investment at this point?

Mark-to-market impact

MMFs invest in bonds and securities that mature