The quiet inflation fighters: How debt mutual funds protected purchasing power

Debt mutual funds are rarely sold as inflation beaters. Yet, over long holding periods, that is largely what they have been. A bl.portfolio analysis of 130 schemes across 11 debt fund categories shows that 89 per cent of seven-year rolling-return observations and 83 per cent of five-year observations beat consumer price inflation).

The finding is particularly relevant at a time when traditional fixed-income products have themselves held up surprisingly well against equities over recent three- and five-year periods. Equities, often considered the default inflation-beating asset, have faced a reality check in recent years. As highlighted in The Great Indian Bull Market Paradox (bl.portfolio edition dated September 20), even the humble SBI FD and Post Office Time Deposits have outpaced the Nifty 50 and many domestic stocks over the last three years.