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Fixed-Income Fund: Alternative to Savings Account

By Ashikur Rahman Tusar

Software Developer

EDGE AMC Limited

Posted on: 20 Dec, 2023

Last Updated: 18 August, 2026

With the hope of a more comfortable and brighter future, Rahman opened a savings account at a bank in Bangladesh. He sets aside 15–25% of his income every month when he receives his salary, and his dream of accumulating a substantial amount by the time he retires keeps him disciplined in that monthly habit.

But Rahman soon realized that saving alone wouldn't be enough. A simple back-of-the-envelope calculation showed him that an inflation rate of 5–10% was outpacing his savings growth and actively eating away at its value. His savings account was offering him 2–3% interest while 5–10% inflation was effectively depreciating the real value of his savings by 3–7% a year. Put simply: he wasn't growing his money. He was losing money.

This is the unfortunate reality facing most savers in Bangladesh. But there's a straightforward way to address it and Rahman's story is a useful example of how.

The Problem With Relying on a Savings Account Alone

A typical savings account in Bangladesh offers interest in the 2–3% range. That might sound like growth, but measured against inflation running at 5–10% or more, it's actually negative real growth because the purchasing power of your saved money shrinks every year, even as the number in your account technically goes up. 

For a disciplined saver like Rahman, this is a frustrating discovery: the habit itself is sound, but the investment vehicle he chose isn't doing its job.

Fixed-Income Funds: A Higher-Return Alternative With Similar Liquidity and Safety

A fixed-income fund invests mostly in assets with minimal risk, such as government Treasury bills and bonds and other stable income-generating instruments. It offers a meaningfully higher return than a savings account at an annual average of 8-10% while still providing comparable liquidity and a similar level of safety, which is exactly the combination a saver like Rahman needs.

When you put your money into a fixed-income fund, you accumulate interest income on top of your savings since the fund is concentrated in government Treasury bills and bonds that make guaranteed payments. With profits from these stable assets, fixed-income funds can deliver an average annual return of 8-10% and the potential becomes even more attractive during periods of rising interest rates.

Take a look at our fixed-income fund, the EDGE High Quality Income Fund (EDGEHQIF), here. 

A Tax Rebate on Top of Better Returns

Mutual funds, including fixed-income funds, also allow eligible investors to claim a tax rebate of up to BDT 750,000. In effect, a fixed-income fund does double duty: it shields your income from inflation and from taxation, on top of delivering a return that a savings account simply can't match.

What This Actually Meant for Rahman

By moving his savings into a fixed-income fund, Rahman didn't have to give up the things he valued about his savings account. He's still able to withdraw his savings, along with the accumulated interest income, whenever he needs to — the liquidity he relied on is still there. What changed is that his money is now actually working for him: steady, decent returns instead of a slow, invisible loss to inflation. 

Frequently Asked Questions About Fixed-Income Funds

Q: Is a fixed-income fund as safe as a savings account?

A: Fixed-income funds invest mostly in low-risk assets like government Treasury bills and bonds, which are generally considered among the safest instruments available, including banking products. That said, a fixed-income fund is still a market-linked investment, so its value can fluctuate slightly, unlike a bank savings account balance, which doesn't move day to day. To better understand how the value of a market-linked instrument can fluctuate, take a look at this article explaining Net Asset Value (NAV). 

Q: Can I withdraw my money from a fixed-income fund whenever I need to?

A: In case of open-ended fixed-income funds, such as the EDGE AMC mutual funds, yes. You can redeem your units at the fund's current NAV whenever you need access to your money, similar to the liquidity of a savings account.

Q: How much can I actually save on taxes by investing in a fixed-income fund?

A: As of August 2026, eligible investors can claim a tax rebate on an investment amount of up to BDT 75 lakhs through investment in mutual funds, including fixed-income funds. The exact rebate depends on your income and applicable tax rules, so it's worth reviewing the current tax rebate guidelines for specifics. 

Q: Is an 8–10% return guaranteed?

A: No. While fixed-income funds invest in stable, income-generating assets, the fund's overall return isn't a fixed guarantee. It reflects the performance of the underlying portfolio, which can vary depending on interest rate conditions and other market factors. 

Q: How is a fixed-income fund different from a Shanchayapatra (National Savings Certificate) or a DPS?

A: Each has different liquidity, tax treatment, and return characteristics. A Shanchayapatra typically has fixed terms and withdrawal restrictions, while a fixed-income fund generally offers more flexible access to your money. To compare the two, check out this article. 

Q: How much should I invest in a fixed-income fund versus keeping money in a savings account?

A: Many investors keep a smaller emergency-fund cushion in a savings account for immediate access, while directing the bulk of their longer-term savings — the money not needed for day-to-day expenses — toward a fixed-income fund. The right split depends on your personal cash-flow needs and risk comfort. At EDGE AMC, you can begin investing with BDT 5,000 for a lump sum investment or BDT 1,000 for an SIP. 

Links

• EDGE High Quality Income Fund (EDGEHQIF)
• Fixed Income Mutual Fund vs. DPS
• SIP vs. Lump Sum
• EDGE Master Guide to Mutual Funds

Disclaimer: Investments are subjected to market risk. Past performance is not an indicator of future performance. This article is general information and does not constitute investment, legal, or tax advice for any specific fund. Trustee boards should obtain independent professional advice regarding their own circumstances and statutory obligations.