New Delhi, Aug. 14 -- Recent company earnings are not painting a very rosy picture of the economy. While some lenders are seeing weaker loan growth, others are seeing higher credit losses. Equities, too, lack momentum, while interest rates appear near the bottom of the cycle. The days of easier capital gains-driven returns have passed, pushing yield-seeking investors toward credit risk via bonds or targeted funds.

Over the past year, government bonds delivered near mid-teen returns as interest rates declined, with AAA yields dropping 1%. Liquid 5-year papers are yielding around 6.75%, a yield that may not excite investors who are used to higher returns. Even the traditional fixed deposit rates of banks and NBFCs are falling.

The only op...