Income funds are a viable option

The idea is to invest for a duration greater than a year


I want to invest for the medium-term to buy a new house. I have already invested Rs 30,000 in Canara Robeco Income. I want your opinion on this investment choice and want to know whether my decision is correct even for future investments in the same plan.
-    Chirag Naik

Income funds take interest rate calls by investing in both short-term as well as long-term securities of the government and the corporate sector. They have the flexibility of shifting between them according to interest rate changes. The past few months have witnessed concerns over market volatility. In such times, income funds have emerged as a viable option since they are better placed to take advantage of any direction that the interest rates take.

Ideally, one must invest in an income fund for more than one year. It is good that you have chosen an income fund for your medium-term goal.

Canara Robeco Income is a five star rated fund. Though it has had good as well as dismal years in the past, it has been doing very well since a new fund manager took over in June last year. In 2008, it has returned an impressive 30 per cent as against its category average return of 14.3 per cent. You can remain invested in the fund.

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