PTI
 
MUMBAI, Jan 25: Income funds are likely to outperform over the next six months amid expectations of falling inflation and softer interest rate regime, ICICI  Prudential Asset Management Company has said in a note to investors.

Income fund or plan is a debt scheme offered by mutual funds which invests in both short and long-term debt securities of government and corporate sector.

The company has pointed out that income plans were star performers over the last six months as well due to downward interest rate trend and moderating of inflation.

ICICI Prudential's income funds' six month returns as of January 15, with a corpus of Rs 2547 crore, were 24.06 per cent, the highest among the fund houses.

Among others, DWS Premier, IDFC and Reliance income funds have also done well.

The AMC has said the market debacle of 2008 and concerns over market volatility have been triggering a quick flight to safety by investors and income funds are a good option.

"The focus on income fund should continue for the next six months on expectations of outperformance during this period," it said.

Suggesting a roadmap for investors in 2009, the AMC has suggested that they first invest in debt schemes like an income fund and by the middle of year shift to hybrid products like a monthly income plan which offers minimal exposure to equity.

Subsequently, investors could look to shift to pure equity diversified schemes after ensuring visibility of stability in markets, it said.