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Time to shift from fixed deposits to debt funds; here’s why
RBI has been increasing repo rates - the rate at which the central bank lends to banks - and reducing system liquidity over the last five months. For example, the benchmark 10-year G-Sec yields have risen almost 160 bps to 7.49 per cent over the last two years. Hence, if one wants to leverage on interest rate movement, it is a good time to invest in debt funds. “ For example, in fixed deposits, whereas bank deposits carry a low-interest rate of 5.45-6.10 per cent, certain AAA-rated corporate deposits carry a coupon of around 7 per cent or slightly higher, which, coupled with a lack of interest rate risk, makes them an attractive proposition,” says Aggarwala. Source: BusinessToday #debtfunds
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