Several banks, flushed with funds because of the demonetisation drive, are cutting interest rates. Obviously, conservative investors who bank on fixed deposits would be badly hit in the coming days. However, these investors would be better off in debt mutual fund schemes, especially long-term debt schemes, to benefit from the likely rate cut by the Reserve Bank of India.
"It is quite possible that RBI will make a rate cut next month, which might boost the returns from bond funds ..