Indian mutual funds are increasing exposure to short-term debt instruments as fund managers avoid long-duration bonds amid uncertainty around interest rate cuts. With inflation risks lingering and global central banks maintaining a cautious stance, demand for sub one year instruments has strengthened. The shift reflects a strategy focused on limiting duration risk and preserving liquidity as expectations grow that monetary easing could be delayed.

India’s mutual fund industry recorded a sharp rise in assets under management, nearing the Rs 80 trillion mark in October.The growth came from market appreciation rather than fresh investor inflows, highlighting the impact of rising equity prices. Smallcap and midcap schemes benefited disproportionately from mark-to-market gains. Industry experts cautioned that sustained AUM expansion will depend on consistent inflows rather than short-term market rallies alone.