As banks reduce their deposits rate, retail investors are gradually putting money in debt fund of mutual funds. Buoyant inflows in income, equity and balanced funds lifted the assets under management (AUM) to a record Rs 15.63 lakh crore in August. Debt funds reported inflows for the fifth consecutive month and AUM crossed the Rs 7 lakh crore mark, according to data from Association of Mutual Funds in India.
Better returns than bank FDs
Debt funds can give better returns than bank fixed deposits and are as liquid as any bank fixed deposits.
There are attractive opportunities in debt schemes for retail investors, ranging from overnight investment in liquid funds to duration debt products like gilt funds, income fund and dynamic bond funds. Returns from debt funds are tax-efficient than bank deposits.
