This year has not been very good for debt funds. The flurry of interest rate hikes in 2022 pushed up bond yields and depressed the returns of debt funds. Most debt fund categories delivered less than 5% returns even as inflation raged at nearly 7% (see graphic). But the tide seems to be turning in favour of debt now. “Debt funds look appealing right now because of the higher yields amid persistently high inflation and rising interest rates for the next few years,” says Sankaran Naren, ED & C ..
