Debt funds - Ideal investment among Fixed Income products

The growth of mutual fund industry in India has been fuelled by equity and debt oriented schemes. These are the only two asset classes where a wide variety of products have been made available. The other asset classes are yet to play their part. Unlike equity products which thrive on the notion of long term, higher risk and commensurate returns; debt mutual fund product appeal to investors based on considerations such as safety, liquidity and reduced volatility of returns.

However, even after several years of introduction and innovation, investing in fixed income mutual fund products largely remains a bastion of institutional investors in India. Retail investor participation in this asset class through mutual funds is negligible given its potential. This is counter intuitive considering the vast amount of savings that the Indian investors have in bank fixed deposits. If one looks at the asset allocation pattern of Indian retail investors, it is evident that Indians are predominantly fixed income investors by nature and convention. This variance is clearly an opportunity for the mutual fund industry.
In terms of diversity of product offerings, the debt mutual fund  offer products with different permutations of liquidity/tenors, credit quality and interest rate related volatility to address various investment requirements based on an investor