Only savvy investors should enter into floating-rate funds: Analysts

Select a debt fund whose average duration is lower than the investment horizon

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In a rising rate scenario, most debt funds (except short-duration ones) see mark-to-market losses. Floating-rate funds are self-adjusting in nature

Sanjay Kumar Singh New Delhi

4 min read Last Updated : Jun 23 2021 | 6:10 AM IST

Interest rates could harden in the near future. One category that can protect investors from the price volatility seen in most debt funds in such a scenario is floating-rate funds. Ten fund houses currently offer them and have cumulative assets under management of Rs 69,730.9 crore. The new fund offer of Tata Floating Rate Fund, which closes on July 5, is also underway.

Rates could rise

Consumer Price Index (CPI)-based inflation has risen over the past six months. It stood at 6.3 per cent in May, crossing the Reserve Bank of India’s comfort zone.

Commodity and fuel prices have

Topics : Reserve Bank of India Inflation Debt Funds Mutual Funds CPI Inflation economic growth