As economic growth falters, inflation is still above the RBI’s comfort zone while a faltering monsoon adds to the overall gloom since it is the key to volatile food prices.

While the debate continues on how the RBI will react to the economic climate, we recommend short-term income funds in this uncertain, and highly unpredictable, scenario. Investors should look at parking their cash in any of these four recommended funds with a time frame of around 12 months or so. The current, average 1-year return of debt funds in the ultra short-term and short-term category is in the 9.50 per cent vicinity. So do yourself a favour and refrain from leaving cash idle in a savings bank account. Capitalise on the market scenario which is throwing up a much better return in a short-term fund. If you are confused between a fixed deposit and a short-term debt fund, clarify your doubts by reading Funds score over bank deposits.

(The Author is Larissa Fernand from Fundsupermart.com)