Debt mutual funds have the ability to provide better returns then bank fixed deposits and can be tax efficient as well, making returns even higher. They are virtually risk free as most mutual funds put money in highly secure debt instruments. Here are few debt funds one can consider.
SBI Magnum Income Fund - Growth
The fund has generated a return of 13 per cent in the last one year. Investing has been in high quality debt and returns are certainly superior to bank deposits. In a falling interest rate regime, the fund can offer good growth.
UTI Dynamic Bond Fund - Regular Growth
The one year returns from the fund has been around 11 per cent. The fund generates optimal returns with adequate liquidity through active management of the portfolio, by investing in debt and money market instruments. The net asset value as on March 26, 2013 was Rs. 12.748.
Templeton India Low Duration Fund (Growth)
The Fund has given a return in excess of 10 per cent over the last one year. An open ended income fund that aims to provide steady returns by investing in a mix of money market and short term debt instruments. The net asset value as on 28th March was Rs 12.6984.
JM Money Manager Fund - Regular Plan - Growth
The fund has generated a return of 9.88 per cent in the last one year. The portfolio comprises some quality instruments, especially secure ones from the government sector. The net asset value as on March 28, 2013 was Rs 16.2906.