Investments in any fund depend on the investor's goal and risk appetite. Conservative investors usually look at debt funds, within which the right type of fund is determined by the investment tenure.

There are a variety of debt funds investing in papers of different maturity and with different risk and return profile. The higher the maturity of the fund, higher will be the risk and vice versa.

If you want to park your money for few days or weeks you can opt for liquid or ultra short term funds. Liquid funds invest in debt papers with maturity of up to 61 days while the average maturity of ultra short term funds go up to one year. Investments for a year can be parked in short-term funds. The weighted average maturity of these funds range between 1 and 4.5 years.

For longer investment tenure of at least two years, dynamic bond funds make sense. The fund manager of these funds has the flexibility to change average maturity of the fund as per the interest rate scenario thus reducing the interest rate risk to some extent.

If you want to invest for a fixed tenure and want post-tax returns higher than bank fixed deposits, fixed maturity plans (FMPs) will be a good choice. These funds invest in debt papers of same maturity as the fund. These are closed-end funds and can be redeemed on maturity. While the interest from fixed deposits will be taxed as per your tax slab, FMPs enjoy indexation benefit and gains after one year will be taxed at 10 per cent without indexation and 20 per cent with indexation.