InvestorQ : Can I say that the indexation benefit makes debt funds relatively more attractive versus equity funds?
Moii Chavate made post

Can I say that the indexation benefit makes debt funds relatively more attractive versus equity funds?

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Moii Chavate answered.
2 years ago
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It is not just the tax indexation benefit but the actual returns and the risk profile that you want to work on that really matters. Let us look at how a typical debt fund will fare vis-à-vis an equity fund due to this difference in indexation benefit? Of course, one can argue that equity funds and debt funds are not exactly comparable as they are different products altogether. But since you have raised the question of comparison on indexation benefit, let us actually try and work out in numbers how it shapes up. The real point to note is that debt funds get the benefit of indexation while equity funds do not. How does that change the equation? Let us look at a live illustration with a five year time frame.

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