Importance of debt funds can be measured from the fact that currently when the markets are volatile, as prices of equities vary from day to day, debt instruments can be trusted for stability.
Mr. Ritesh Nambiar , Senior Vice President, UTI MF says that’ “while most common investors in India are now well aware of the powerful concept of mutual funds, they usually associate mutual funds with the equity category, and the importance of having Debt Mutual Funds in the overall portfolio is often not understood.”
Being underweight on duration and focus on capital preservation with lower volatility of returns is what an investor should look at in terms of debt funds. Fixed income plans, or, FMPs, present a good opportunity again for risk-averse investors. It also may be a good time to begin a systematic investment plan in income funds at these heightened yields
“One should know their debt mutual funds better and choose the schemes based on their investment profile. Like, one can invest in a liquid scheme for few days or weeks, an ultra-short term scheme for few months to a year and a short term scheme is better for investment for few years,” says Mr. Nambiar.