HNIs turn to low-return products; tax-free bonds, FDs preferred choices

Tax-free bonds, FDs, RBI 7.75% bonds, gilt funds preferred choices

Risk-averse wealthy investors, who have pulled out money from credit-risk funds, are looking at a number of alternatives in the debt segment, notwithstanding the lower post-tax returns.

The options range from tax-free bonds, bank fixed deposits, and RBI 7.75 per cent savings bonds for the ultra-conservative to gilt funds, corporate bond funds, banking and PSU funds, and sovereign bond funds for others. 

“Investors have burnt their fingers in credit-risk funds and AT1 bonds of YES Bank and become risk-averse. The safety of capital has gained primacy over returns, which is why a lot of money has moved to products like