Investors looking to allocate money in fixed income schemes should stick to debt funds that invest in short-term and medium-term paper only with the Reserve Bank of India (RBI) seemingly in no hurry to cut interest rates.
"There is not rate cut visibility for the next six months. Investors would be better off playing accrual strategy than duration," says Rupesh Bhansali, head (distribution), GEPL Capital. This will help preserve capital and prevent erosion of returns. Bhansali recommends investors put their money only in short-term and medium-term debt funds and stay away from long-term gilt funds.
