The Mutual Fund Show: Why Debt Schemes May Be Entering A 'Very Happy' Period

While the equity markets shine bright with a growing number of investors, the confidence in debt mutual funds stands shaken amid increasing bank rates, though experts see a lot of scope for such schemes.

"The opportunities that are there for the debt fund investor have not necessarily sunk in," said Swarup Mohanty, chief executive officer of Mirae Investment Managers (India). This is due to lack of communication from the manager's side, he told NDTV Profit.

Looking at the current situation and the rate cycle, there is a "very happy situation for debt mutual funds in coming quarters", according to Mahendra Kumar Jajoo, chief investing officer-fixed income, Mirae Asset Investment Managers India.

The longer the tenure of investment, the higher will be the returns, he said. "Investors needs to try to match his investment horizon with the product maturity."

Both Mohanty and Jajoo also spoke about the options in debt mutual funds. Investors can choose the fund to match the investment tenure.

"Debt mutual funds give you a whole range of option. Starting from liquid funds, where you can put in transactional money, or target mutual funds up to 15 year... A whole range is there," Jajoo said.

The taxation on debt funds has put them at par with other forms of investments, making it easier to compare gains, Mohanty said. If a comparison is made, then debt mutual funds will outweigh other products, he said.

Long-term investors will benefit as they can gain from compounding that will dilute the taxation, Jajoo said.

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