How debt MFs performed this year?

The year 2018 has been volatile not only for equity but for debt as well. Reason being many events such as IL&FS fiasco, the resignation of Urjit Patel, and some of the actions taken by SEBI (Securities and Exchange Board of India).

So if we look at the returns of the individual sub-category of debt mutual funds then medium to long duration debt funds gave the least returns of 4.71 per cent followed by credit risk, dynamic bond, corporate bond and medium duration funds with returns of 5 per cent, 5.34 per cent, 5.58 per cent and 5.59 per cent, respectively. However, gilt with 10 year constant duration and FMP (Fixed Maturity Plan) gave the highest returns among the debt mutual funds category with returns of 8.62 per cent and 7.18 per cent, respectively followed by low duration, liquid, long duration, money market and ultra-short duration funds with returns of 6.98 per cent, 6.87 per cent, 6.76 per cent, 6.76 per cent, and 6.68 per cent, respectively.

So from the above information, we understand that having debt portion in a portfolio is important to provide a cushion against fall faced by equity. Though this may not provide you superior returns as equity can but may help you reduce the downside risk of the portfolio. However, it is important to first review your risk profile so that you will understand how much risk you can take and how much to allocate towards debt.