Debt schemes from mutual funds are less risky bets as compared to equity funds, as they tend to invest in safe debt instruments. Here are a few debt funds that can provide decent returns and compare well with bank fixed deposits. However, dividends from Mutual funds is tax free, while interest income from bank fixed deposits is taxable. Hence, the post tax yields can more often than not, be better in the case of debt schemes, if you choose the dividend payment option. Here are 5 schemes which offer decent returns.
Birla Sun Life Floating Rate Fund - Short Term Plan
The fund has generated a return of 9.58 per cent in the last one year. Birla Sun Life Floating Rate Fund - Short Term Plan has a strong portfolio comprising of debt instruments like certificate of deposits, commercial paper and bank fixed deposits. It declared a weekly dividend of 0.1314 recently.
Escort Liquid Fund
Escort Liquid Fund has generated a return of 9.76 per cent in the last one year. The fund has investments in Commercial Papers that are highly rated at P1+. It recently declared a weekly dividend of 0.0079.
ICICI Prudential Liquid Plan - Regular Plan
ICICI Prudential Liquid Plan - Regular Plan has generated a return of 9.47 per cent in the last one year. The fund has a high exposure to the term deposit of Corporation Bank. The fund has declared a monthly dividend of 0.5696.
Templeton India Treasury Management Account Fund
The fund has generated a return of 9.61 per cent in the last one year. The fund has invested in commercial papers and certificate deposits.
DSP BlackRock Liquidity Fund
DSP BlackRock Liquidity Fund has given a return in line with most of its peers at around 9.36 per cent. The funds has a portfolio that comprises several highly rated debt instruments.