tax planning tips

Mid-term income funds a better bet amid 'High' yields

BNP Paribas, Kotak and DWS AMC have rolled out medium term income funds in the last fortnight. Canara Robeco AMC launched a similar scheme in January. IDFC, HDFC, Birla Sunlife and Religare AMC already have a similar scheme too. Why is this sudden focus on medium-term income funds?

"While income funds invest in portfolios with an average maturity of more than seven years and short-term bond funds invest in portfolios with an average maturity of less than three years, bonds with residual maturity of 3-7 years are generally not picked up by mutual funds. These funds are positioned to invest in this gap and take advantage of the prevailing attractive yields," says Tanwir Alam, founder and CEO, Fincart, a financial planning entity.