MF investors must stay invested for 12-18 months to beat volatility

Reliance-Mutual-FundInvestors should make investments in mutual funds with a timeline of 12 months to 18 months to beat volatility, according to a piece of advice from Reliance Mutual Fund.

Amit Tripathi, head of fixed income at private sector mutual fund, said investors should make sure that they have a horizon of at least one year in the short-term income funds; while they must stay invested for at least 18 months in the long-term.

Making the suggestion, Mr. Tripathi said, "In the short-term (income) funds, investors should have a horizon of not less than one year. Similarly, in the long-term funds, investors should stay invested for 18 months or beyond."

The piece of advice from the private-sector expert comes as the country's debt market is facing increasing volatility.

Mr. Tripathi also predicted that ongoing volatility in domestic debt market could continue for another three to four months.

Rates on short-term investments have jumped by as much as 300 basis points (bps), while long-term rates have soared by nearly 120 bps since the Reserve Bank of India (RBI) announced a slew of measures to squeeze liquidity from the country's financial system. While short-term rates are currently at nearly 10.5 per cent, ten-year benchmark yield is hovering at around 8.8 per cent.