Ethyx Club
December 5, 2025
For patrons who prefer a lower risk profile than what is usually associated with mutual funds, there are various alternative credit opportunities that emphasize capital preservation and reliable returns. These alternatives typically value stability more than the potential for high growth and provide various mixes of liquidity and returns.
In the following article we will talk about what are the other low risk alternatives to mutual funds that you can consider as a safe credit opportunity.
These are low risk and have guaranteed returns. These include-
* Certificates of deposit (CDs): CDs are low-risk. Insured by the RBI, they offer fixed interest rates over a set period. Their returns are usually higher than those of savings accounts, but still fixed and predictable. CDs can be well-suited for people who don't need immediate access to their funds and are looking for relatively higher, guaranteed returns over a specific period.
Why: guaranteed fixed interest rates. RBI-insured
Risks: funds locked up until maturity, early withdrawal penalties, and possible account minimums
Safety: high
Liquidity: low
* High yield savings account: It offers a low-risk bank account option but with higher interest rates than regular savings accounts. Online banks with lower overhead expenses than traditional banks can often offer such products at better, high yielding rates. These accounts are ideal for short-term savings goals where you want to earn more interest than a regular savings account and hence, are a good low risk credit opportunity.
Why: higher interest than regular savings
Risks: returns are still quite low, and some banks may charge account fees
Safety: high
Liquidity: high
* Treasury securities: Consists of instruments like treasury bills (T-bills) and treasury notes (T-notes). They are very low-risk and provide a safe way to earn a return. However, the returns are generally lower than high risk credit opportunities.
Why: extremely safe and highly liquid
Risks: lower returns compared with somewhat riskier bonds
Safety: very high
Liquidity: high
For people who prefer limited market exposure, some credit opportunities provide stability along with the possibility of higher returns compared to conventional savings options. They are-
* Money market funds: They are low-risk credit opportunity as they are stable, short-term debt instruments and certificates of deposit. Though rates are still relatively modest, they usually offer higher yields than savings or money market accounts. Returns are variable based on holdings. These funds are suitable for people seeking higher yields than a savings account but who also value liquidity and safety.
Why: higher yields than savings accounts, very safe, very liquid
Risks: returns are modest.
Safety: high
Liquidity: high
* Stable value funds: A stable value fund consists of a bond portfolio designed to offer patrons capital protection along with steady interest payments, which makes it a favoured option in retirement plans for individuals who prefer low risk.
Although they provide a level of security and marginally better returns compared to money market funds, stable value funds tend to have lower yields. They may incur higher management fees than alternative credit opportunities. It's important to consider the risk of inflation, as these funds will not appreciate in value despite the rising costs of goods and services.
Some of the moderately low risk alternatives to mutual funds are as follows-
* Debt mutual funds: Debt funds allocate capital to securities that produce fixed income, such as treasury bills, government securities, and various other money market credit opportunity. They are well-suited for time periods ranging from 1 day to 3 years and are considered low-risk options.
They provide greater liquidity compared to fixed deposits, and their returns tend to be more consistent than those of equity funds. Patrons with a long-term perspective might gain from tax efficiency via indexation. However, they still bear market risk, although typically less than equity mutual funds. Returns are not assured.
* Corporate bonds: A corporate bond fund is fundamentally a mutual fund that allocates over 80% of its total assets to corporate bonds. Business entities issue these bonds to cover their immediate expenses, including working capital requirements, marketing, insurance premiums, and more.
Corporate bond funds are gaining popularity as a debt instrument for companies seeking to secure necessary funding, as the costs involved are generally lower than those of bank loans.
These low-risk credit opportunities cater to individuals who are cautious about risk and wish to achieve better returns from their selected credit options. However, it is essential to carefully evaluate the available choices before moving forward with any credit option. Ultimately, the choice of secure assets should align with one's overall investment portfolio and risk tolerance.