Even as gilt funds lose money when interest rates rise, those that invest in the money market gain. Money market is the shorter-term market where the tenure of instruments is less than one year. Liquid funds are investors' popular choice. They invest in very short-term securities such as commercial papers, short-term treasury papers and bank deposits. These instruments do not lose much value when rates rise. So, if one holds on till the maturity of the product, the investor stands to gain from a rising yield. So, while they are offering returns of around 4-5% currently, this number will rise when the Reserve Bank raises rates later in the year.

JPMorgan Mutual Fund has launched a new fund named as JPMorgan India Short Term Income Fund, an open ended income scheme. The new issue is open for subscription from 18 March and closes on 23 March 2010.