Bank fixed deposits vs bond funds: No interest in bonding
If you think returns from bond funds will trump those from bank fixed deposits, you have another think coming
The corpus invested by mutual funds in bonds is much larger—almost eight times—than in equities. Bonds should also be a very important part of your asset mix. So, are mutual funds that invest in bonds preferable to bank fixed deposits (FDs)?
The features of bank FDs are better known than the trends and performance of bond markets, especially when the interest rate scenario is volatile. This is because the bond market is practically closed to individual investors. If you want to buy, say, an 8.5% Government of India (GoI) 2020 bond, you will not be able to because it is not traded like the shares of Reliance in small quantities by millions of...
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