Liquid, short-term funds look attractive, says UTI MF

To avoid any possible risk related to election outcome, investors should look at debt funds and short-term income schemes given their attractive yield levels, according to UTI Mutual Fund.

In this context, the fund house advised investors to opt for fixed maturity plans (FMPs), ultra short-term and short-term income funds.

"We are advising investors to invest in ultra-short term category along with short-term income funds. FMPs are also good at current levels," Fund Manager of UTI MF Sudhir Agrawal told PTI said.

However, the long-term bond investors should have a time horizon of 18 to 24 months, he said.

Agrawal said given the easy liquidity scenario, short-term yields are likely to come off in the near-term.

Asked about RBI's monetary policy review meeting on April 1, he said the central bank is likely to maintain status quo on rates.

The fund house doesn't expect much impact of trimming of US bond buying programme on Indian debt market.

"The Fed is likely to continue tapering. If US interest rate goes up this year itself, as against the expected hike in next spring, then we may see some pressure. Otherwise, this (tapering) has been factored in by the market," he maintained.

The fundamentals of domestic economy have changed for better overtime with improvement in current account and fiscal deficits besides on some other fronts.

Asked about attractiveness of domestic debt market for FIIs going ahead, Agrawal said this would depend on the rupee movement, which is firmly inter-linked with the election outcome.