If you want to invest your money safe and better for just 3 to 6 months, now you have smart options besides bank FD. Recently, many mutual funds companies have launched Crisil-IBX Financial Services 3-6 Month Date Index, which has launched Constant Maturity Index Funds (CMIFS). The special thing is that these are open-ended products, that is, investors can exit and withdraw money in it and the special thing is that there is no lock-in period.
The purpose of these funds is to offer less risk, good liquidity and more returns than bank FDs for short -term investors. In existing bank deposits, where the average return of about 4.25% is being received, this date index funds have the ability to give 6-6.4% indicative yield i.e. about 200 basis points more. Many major companies like Axis Mutual Fund, Kotak and Bandhan are offering short -term date index funds, which are specially fond of corporates, conservative investors and high networks.
The special strategy of these funds is ‘Roll-Down’. In this, fund managers buy six months of maturity security and when their maturity remains only three months, they sell them and then invest in new six months papers. These funds living in the range of three to six months in a row keep the duration risk significantly, making market volatility minimal.