Debt funds can beat fixed deposits on post-tax returns, says expert

While recent events have dented confidence, investors should not avoid debt funds altogether

Investors in debt mutual funds are a worried lot. With fixed maturity plans (FMPs) and credit risk funds witnessing net outflows of Rs 17,644 crore and Rs 1,253 crore respectively in April, there are signs of nervousness. As a leading distributor says: “I get calls every day, even from seasoned high networth individuals, wanting to exit their debt funds. I try to talk them out of doing so by talking about tax benefits and better returns. But it is a tough call in such times.” 

And it is. With the defaults of Infrastructure Leasing and Financial Services companies, delays in payment