If 2022 was the year of take-off, many anticipated 2023 to be a year when RBI's rate cuts would cause the beefed up returns of overnight, liquid and ultra-short-duration funds to gradually fall. However, with inflation still above RBI's comfort zone, the interest rates seems to have stabilised in India. Thus, the street isn't expecting RBI to take the rate-cut bus just yet. This situation bodes well for very short maturity categories. Let's explore how. The case for shorter-maturity funds As these funds invest in short-maturity bonds, their portfolio matures frequently and the fund manager gets a chance to reinvest the money at the prevailing rates. Therefore, these funds are the first to get impacted from the rate cycles. In the last one and a half years, these funds have been major beneficiaries, because the short-maturity bonds (which form a major portion of these funds' portfolios) saw rising yields, amid the increasing rate cycle. This boosted the returns of these funds. Since our last update , the one-year trailing returns have increased by an average 1 per cent across the categories. The chances of an imminent d
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