Banking and PSU debt funds are the best alternative to bank fixed deposits

Their annual returns are slightly over 8% and can be a good choice for risk-averse investors

The default by the Infrastructure Leasing & Financial Services (IL&FS) and its subsidiaries might have dented debt funds’ popularity, but fixed-income investors need not run away from debt funds completely. There are certain categories like banking and PSU debt funds (BPDFs), where one can make good money with nominal risk. 

“BPDFs are good investment options, as market-related volatility is relatively lower than long-duration funds,” says Joydeep Sen, founder, Wise Investor. 

Agrees S Sridharan, head-financial planning, Wealth Ladder Investment Advisors. “These funds are the best alternative to bank fixed deposits due to low volatility, coupled with low risk. Investors would do