What is the Reserve Bank of India's (RBI) stance on interest rates?

The RBI's stance has shifted, leading investors to move towards shorter-duration funds in these uncertain times.

How have global trade concerns affected India's mutual fund industry?

Global uncertainties linked to US tariffs have added to investor worries, further dampening the appetite for longer-term bonds.

Which categories of mutual funds have seen the highest inflows in India?

Liquid, ultra-short duration, low duration, and money market funds have seen the highest inflows of 1.3 trillion rupees ($14.8 billion) in October 2025.

Home / Business and Economy / India's Mutual Funds Pivot to Ultra-Short Bonds Amid Rate Uncertainty

India's Mutual Funds Pivot to Ultra-Short Bonds Amid Rate Uncertainty

13 Nov

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Summary

Mutual funds see inflows of 1.3 trillion rupees into short-term funds
Investors wary of longer-term bonds due to uncertain interest rate outlook
Global trade concerns also curb appetite for long-tenor securities

India's Mutual Funds Pivot to Ultra-Short Bonds Amid Rate Uncertainty

As of November 13th, 2025, India's mutual fund industry is adapting its investment strategies to the prevailing market conditions. Faced with an uncertain interest rate outlook and global trade concerns, fund managers are increasingly favoring ultra-short-term bonds over longer-tenor securities.

The Reserve Bank of India's upcoming monetary policy decision on December 5th, 2025, is a key factor driving this shift. Despite inflation falling to a record low, swap markets are not pricing in a rate cut, leading investors to take a more cautious stance. "Due to RBI's shift in stance, investors may have taken a view to shift to shorter duration funds in these uncertain times," explained Avnish Jain, CIO - fixed income at Canara Robeco Mutual Fund.