Mutual funds increased allocation to the short term debt securities significantly in the last one year, SEBI data shows. Over the past year, MF allocation to such papers increased by ten percentage points. Experts attribute that the yields on short-term papers such as Certificates of Deposit (CD) and Commercial Paper (CP) have hardened significantly following the rate hikes by the RBI and tighter liquidity conditions in the banking system. Institutional investors prefer pocketing them as these papers are traded in 7.1-7.4 range, which is almost close to the yields of 10-year benchmark government bonds. This will, in turn, raise the overall return of the debt schemes that those hold these assets.