For investors looking for low-cost, low-risk, and easily liquid investment options, there is now an alternative to traditional short-term bank deposits.
Several mutual fund companies have introduced Constant Maturity Index Funds (CMIFs) that track the CRISIL IBX Financial Services 3–6 Month Debt Index.
These funds invest in short-term debt instruments like bonds and money market securities issued by banks, NBFCs, and other financial institutions.
What Investors Can Expect
According to Aditya Pagaria, Senior Fund Manager at Axis Mutual Fund, these funds are designed for:
Conservative investors
Corporate treasuries
High-net-worth individuals
They are suitable for those who want to park surplus money for 3–6 months.
With an indicative yield of 6–6.4%, these products offer nearly 200 basis points more than the average 4.25% return on short-term bank deposits.
Most importantly, CMIFs are liquid with no lock-in period, making them flexible and investor-friendly.
Low Risk Through Roll-Down Strategy
These schemes follow a roll-down strategy. Here’s how it works:
The fund manager invests in 6-month securities.
When the maturity reduces to 3 months, they are sold.
The money is then reinvested in fresh 6-month securities.
By keeping the investment duration within 3–6 months, these funds minimize both duration risk and volatility, ensuring stability for investors.
In short, CMIFs give investors a safer, better-yielding, and more liquid option compared to regular short-term bank deposits.
