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Why are liquid funds not doing nicely nowadays? Ought to I transfer my short-term cash some place else?
– Bhaskar
I do not suppose transferring your cash some place else will generate something extra. If you would like low threat and predictable return, liquid funds are the best way to go or possibly ultra-short-term-bond funds that go slightly larger on the maturity curve and subsequently could earn little extra.
To reply why you’re incomes much less return is just because rates of interest have come down. Having stated that, there’s a concern that inflation could rise within the coming months, and if inflation goes up, rates of interest may even go up. If that occurs, yields will come again once more.
So, these funds will profit a bit as they’ll incrementally make investments at higher yields. These funds spend money on bonds maturing in about 91 days, and subsequently, their corpus comes up for re-investment often. These re-investments could quickly occur at higher yields, thereby giving barely higher returns to you.
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