Date: February 7, 2009
Ref. No. MPML/PMS/210/2009
"Gilt Funds Witness Net Inflows in December & January"
According to the data from the Association of Mutual Funds in India (AMFI), mutual funds saw net inflows into schemes such as income and gilt funds in December after three months of heavy outflow in most categories managed by them. AMFI data shows inflows, net of sales, into Gilt Funds were Rs.4,501 cr in December and Rs.988 cr into gilt funds.
The Net Asset Value (NAV) of these Gilt funds has been steadily rising, whetting investor appetite, after the Reserve Bank of India (RBI) started lowering policy rates. Taking a cue from other central banks, the RBI dropped the repo rate, which it uses to inject liquidity into the system, in phases to 5.5% earlier in January from 9% in October 2008. As long as RBI keep on reducing the policy rate there will be rise in the NAV of the Gilt Fund.
Net inflows in December were Rs.90 cr across all categories of funds, sharply lower than the Rs. 13,790cr in November. But a majority of November's inflows came from Rs.15,143 cr that went into liquid funds, which invest in short-term debt and are used by corporate houses to park surplus money.
Hence we suggest you to invest in Reliance Gilt Securities Fund. We also suggest you to invest in one of the best performing Gilt Fund in January 2009 ie. ICICI Pru Gilt inv PF-G Fund.