attractive as short-term yields are likely to fall,” said Maneesh Dangi, co-chief investment officer, Birla Sun Life AMC. Ultra short-term funds gave returns of 9.4% in 2012 against 8.9% in 2011.
Long duration funds will benefit from rate cuts. “Funds focused on corporate bonds should continue to do well. Besides, investors could also consider long-dated gilt funds, but should be ready for short term volatility owing to changes in oil prices and currency,” said Santosh Kamath, CIO, fixed income, Franklin Templeton Investments. According to Mehta, duration products carry higher risks and volatility, and long-term FMPs may attract money from investors with lower risk appetite.