Debt MFs face lower risk, may put up a better show in Samvat 2079

Analysts advice investors to stay away from longer-duration funds yet, or consider a staggered plan

Samvat 2079 could be rewarding for investors in debt mutual fund (MF) schemes, after disappointment in the last two years.

Debt MFs are looking up after struggling to beat inflation in the last few years. Considering the present yield-to-maturity (YTM) of most debt fund categories, there is a good chance that their return chart will look much better next Diwali.

All fund categories, be it a short-duration liquid fund or a longer-term gilt one, seem to be outpacing inflation to deliver slightly higher returns than bank fixed deposits. Owing to the rate hikes, the YTMs of shorter-duration funds have reached