In case of our income fund, the target is to increase the assets under management from Rs.2.8 bn at present to Rs.5 bn by March end and for our gilt fund, the target is Rs.1 bn from the present Rs.400 mn. Basically the product is targeted at a niche audience and not the retail investor at large. Though the cut in Fed rates would not have a direct bearing on domestic interest rates, the cut in the interest rate by a major international economy would certainly avoid any upward pressure on Indian interest rates. Further the RBI governor has recently indicated that borrowing costs are high though it may not be possible to undertake structural changes on an immediate basis. Softening international interest rates should pave the way for a reduction in the bank rate and CRR in the beginning of the next financial year.
People associate fixed income funds with no risk.
However this is a misconception and investors have to be educated more about the risks of investing in fixed income funds. We generally advise people to decide upon their investment horizon and accordingly we suggest the scheme to invest in. For instance, after the CRR rate hike in July investors panicked and started pulling money out of income funds into liquid funds. The same investors have now started flocking to income funds after the sharp appreciation in the NAVs post the IMD inflows. Now the point that I am trying to make is that had these investors stayed invested in income funds, they would have reaped the benefits of rise in the NAVs.