Demonetisation effect: Should you prefer Debt MFs over FDs

With lot of criticism made on the bold move by the Prime Minster of India, investors need to start digesting the fact that demonetisation is finally a reality and more such severe measures might be in on the cards.  No matter how good the demonetisation move is perceived to be for Indian economy in the long run, chances are bright that investors money may not generate commensurate returns wherever the money is parked, be it FD, direct equity , equity mutual fund , gold etc.

Investors with surplus money need to start focusing on where to invest the funds rather than keeping them idle in the bank’s savings account which is fetching a lower interest rate on money.

Investing in debt oriented mutual fund is something which is not very popular with investing public at large in India but the current situation in India is suitable for investments to be made in the debt instruments.

Investors ideally should consider taking exposure to the debt mutual funds with good track record as the interest rate environment is expected to be subdued. With lower interest rates the fixed income securities are expected to gain in prices and the expected returns from such an instrument could be higher than the fixed deposits' return.

HDFC High Interest -  Dynamic (G) & ICICI Pru Dynamic Bond Fund are amongst the top two debt funds that investors can look  into for parking their monies. These funds have delivered more than 14 per cent in one year period even as the best of equity diversified funds have struggled to match the performance of these funds.