The scheme has since mopped up another Rs 66 crore in the first four months of the current year. The Fund is an open-ended income fund with 100 per cent investment in debt. "We have crossed mobilisation of Rs 100 crore in the Magnum Liquibond Fund by the first week of May and it is one of our best performing schemes. This is also a pointer towards the better fund performance activities being undertaken by the mutual fund," said SBI Mutual Fund managing director Naimatullah.

"The interest rates in the country for the moment will be stable. But going further from here, two variables will determine the interest rate scenario which we are closely watching. One, what amount of credit offtake will take place in the economy. And second, the behaviour of the rupee," said SBI MF chief investment officer VedPrakash Chaturvedi.

"Income funds operate within the overall economic and interest rate scenario and thus the performance and yields are reflective of that only. Income funds in the category that they operate in give higher returns compared to other avenues of investments in the same category," said Ved Prakash. The Magnum Liquibond Fund has managed to give an annualised return of 14.07 per cent since inception on January 1 and 13 per cent in April 1999. The net asset value of the fund on January 1 was Rs 10.16. Since then the NAV of the fund has moved up to touch Rs 10.52 on April 1 and Rs 10.63 on May 1.

The top 10 holdings in the portfolio comprises investments in debt paper of Nalco, IDBI, Piem Hotels, GE Shipping, Tisco, Citicorp and ICICI. Almost 78 per cent of the portfolio is invested in AA and above rated paper. The maturity profile of the portfolio as on April 30 is of around 47.25 per cent in less than one-year paper, 31 per cent of the portfolio has a maturity profile of 1-3 years and 21.6 percent of the portfolio consists of less than three years of maturity profile.

According to analysts, in a low interest rate regime it is likely that the yields of the income funds of mutual funds will definitely be lower when compared on an year-to-year basis.

Analysts feel that although the yield will be lower, the returns of income funds would any way be higher than alternate avenues of investment.