Which is the best debt fund currently?
- Sandeep Paranjpe
The right way of choosing a debt fund would by first deciding on your investment timeframe. Choosing any debt fund randomly would be inappropriate. But assuming that you're looking to invest in fixed income for at least one year, you should go for dynamic bond funds. Dynamic bond funds and FMPs can help you optimize returns, but investing in the latter would be a compromise on liquidity as you'll be locked in for a definite period. This will eliminate the upside if there's a change in the interest rate outlook. But with dynamic bond funds, you will be able to capitalize on interest rate opportunities. And even if no opportunity presents itself, you'll be able to match the returns of a short-term bond fund.
This article was originally published on August 03, 2012.
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