Still hooked to debt? Look at floaters

<div class="section1"><div class="Normal"><span style="" font-family:="" arial="">BANGALORE: Last few months have been more painful for debt fund investors than the equity. The returns have turned negative and continue to be so even in the near future while the budget could change fortunes for equity investors.</span><br /><br /><span style="" font-family:="" arial="">The unfavourable developments in the domestic and international markets have made the task difficult for debt fund managers.For those who still prefer to stick to debt and not switch to equity, it is tough to make an investment call.</span><br /><br /><span style="" font-family:="" arial="">Such investors can look at floaters. They are mutual funds that invest infloating rate instruments. Since the rates are linked to a benchmark, any rise in interest rate will increase the rate of return for the investor. In the current interest scenario, the upward movement in interest rate is more likely than a fall and hence it would be a right option if you are looking for a safe instrument for long term funds. As you are aware, the US Fed rate has already gone up by 0.25 per cent.</span><br /><br /><span style="" font-family:="" arial="">Even in the short term, it would be sensible for investors to move away from debt and bond funds and look at other options like liquid funds and floaters. Srikanth Bhagavat, managing director, Hexagon Capital Advisors, says short term investors with a tenure of less than three months should ideally look at liquid funds since there is no threat of capital loss. For long term investors, floaters or floating rate funds would be the right product.</span><br /><br /><span style="" font-family:="" arial="">A number of mutual fund companies have already launched their floating rate product and hence it would not be very difficult for you to pick up an investment plan. Also, the risk of investing in them is very minimal at the current juncture, as interest rates are headed northwards. More importantly, floating rate instruments avoid volatility as they are linked to a benchmark and are reset at regular intervals.</span></div> </div>