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Which debt funds to pick in a rising interest rate scenario?

To gain from the rising interest rates, consider your time horizon and risk appetite to choose the right debt fund category

Which debt fund is best during rising interest rate?

How to select debt funds in a rising interest rate scenario?
- Vipul Sachdeva

To begin with, we have covered five strategies to adopt when interest rates are rising, in one of our earlier articles.

In brief, we have always advocated to keep things simple.

And nothing beats the simplicity and the effectiveness of short-duration funds through the ups and downs of interest rate cycles. They can deliver better returns than fixed deposits (FDs) with greater tax efficiency and peace of mind.

Overall, the short-duration funds offer the best combination of everything an investor may want from a debt product. This is our preferred investment option in such scenarios.

For a select set of investors who have a very well-defined investment horizon, seek predictability and can settle for slightly modest returns, target-maturity funds can add value to their portfolio.

You can also look into funds handpicked by our team of analysts.

For an in depth study about the five strategies, read the article here.

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