In last 18 months we are saying Debt funds should be dominant part of your Asset Allocation. In last 15 years due to lower interest rates regime ,they didn't get chance to outperform . But we believe for Higher interest rates regime is here to stay for longer period. We play this idea for our clients through Hybrid funds and pure Debt funds like Low duration,Short term bond or medium Dur or credit.
A year back bank FD for 1 year was just below 4%. Most debt funds were also delivered similar returns but if you chose to invest in 1 year debt option in May 2022 then the outcome would have been;

Bank FD 3.9%

Overnight fund 5.8%

Liquid Funds 6.1%(1/4)

Ultra. 6.0%

MM 6.3%

LD. 5.5%

ST. 6.4%

Corp Bond. 6.8%

Credit. 7.2%

Medium. 8.4%

Gilt fund. 7.6% (2/4)
Beauty of debt MFs is that they repriced very fast and can be great option even in rising interest rate scenario!

Think and choose wisely . . . ..A blog by Santosh G Akerkar