Are debt funds as safe as they are made out to be?
To ensure debt funds work for you, know how to manage the associated risks
Short-term debt funds with a 100% AAA portfolio give better post-tax returns than options like bank deposits
When it comes to investments that are safer than others, debt mutual funds often figure on the list, sometimes as an alternative to fixed-income options such as bank deposits, bonds and small savings schemes. While investors are attracted by the tax advantage debt funds provide compared to other competing products, they tend to ignore the risks that come along. So unless there is a good fit between your particular need and the type of the debt fund selected, it can do more harm than good to your goals. That’s why it’s important to understand the risks in debt funds and to know how to manage them.