Gold rally too good to last? What history tells about gains, volatility

Gold has been on a remarkable rally of late, with returns soaring into the upper distribution tranches.

- SARBAJEET K SEN

Several fund houses, including ICICI Prudential Asset Management Company (AMC), Aditya Birla Sun Life AMC, Kotak Mahindra AMC, and Bandhan AMC, have recently introduced ultra short-term debt index funds.

These schemes track the Crisil-IBX Financial Services 3-6 Months Debt Index. According to reports, the cut-off yield for 90-day treasury bills (T-Bills) at Wednesday's auction stood at 6.52 per cent, compared to 6.47 per cent for 364-day T-Bills.

"Currently, investors are looking for stability, liquidity, and reasonable returns amid fluctuating interest rates, inflationary pressures, and global uncertainties. Short-duration debt instruments, particularly in the three-six-month segment, are attractive as they provide relatively higher yields while minimising interest-rate risk," says Sirshendu Basu, head-products, Bandhan AMC.

Continuous infusion of liquidity, expectations of further rate cuts, including a probable change in stance of the monetary policy, makes the shorter end of the yield curve attractive at present.