The value of such funds is sensitive to the interest rates. Ideally suited for investors who want regular income, like retired people. Provide a mix of income and growth. Aim of such schemes is to preserve principal, while generating modest incomes. Managers invest in safe short-term investments, such as treasury bills, certificates of deposits, interbank call money market.
Income depends upon short-term interest rates.
Generally corporates park their short-term funds surplus in money market mutual funds. These schemes offer tax rebates from time to time, due to government policies. E.g. incentives such as savings on capital gains, if invested in equity linked mutual funds. Specific Schemes i. Some schemes, track the performance of specific indices such as BSE Sensex or Nifty 50.