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Do you have funds to invest for one to three years and don’t wish to take too much risk with it? One category you may invest in is a short-term debt fund. If you are searching for a fund from this category, look up Morningstar’s review of ICICI Prudential Short-Term Fund.
Not satisfied with the returns of bank fixed deposits and looking for a little extra? Consider investing in a corporate fixed deposit. For an overview of the ratings and returns offered by the leading issuers, look up Paisabazaar’s table.
NUMBER OF THE WEEK
Rs 15,226 crore
Stress test data shows that smallcap funds holds cash equivalent to almost 5 per cent of their assets under management (AUM) amounting to Rs 15,226 crore. The amount is 6.1 per cent of the AUM of Rs 2.5 trillion.
The cash in midcap funds stood at Rs 13,150 crore, which is 4.4 per cent of the AUM of nearly Rs 3 trillion.
After a run-up over the past year, valuations in the small and midcap space have turned expensive. The run-up has also led to heavy inflows. One reason for rising cash holdings within these funds is that fund managers are finding it difficult to find reasonably valued stocks in which they can deploy the money they are getting.
Cash in hand has some advantages for fund managers. If the market falls, the fund is protected to the extent it is in cash.
However, there is a flip side to this strategy. If the markets rally, the fund is left behind and could underperform peers that are fully invested.
