Also, investors should be sensitized to the fact that all debt funds don’t come with a uniform amount of risk. This can be achieved only when, among other things, different debt funds stay and work within their limits. So, I do endorse the view that there should be a defined contour for most categories in fixed income, including short-term funds. A regulated cap on the average maturity of the short-term funds can give rise to several idiosyncrasies and make the market imperfect in this dynamic environment. Investors expect short-term funds to provide exposure to the short-term debt market.

Source: Mint February 20, 2017 11:43 UTC