Skip to main content

Debt Mutual Funds

Tax Saving Mutual Funds Online

Current open Infra Bond Application form

In the last one-and-a half years, whenever financial planners were asked about investing in debt funds, the advice was — stay short. That is, invest in short-term debt funds. Things have changed significantly since the last fortnight, when the Reserve Bank of India indicated a halt in rate increases. Rates could now fall in the months to come.

As a result, market experts are happy advising long-term debt funds. We believe policy rates have peaked. It makes sense for investors to increase allocation towards longer duration funds. Investors can consider investments for horizons ranging from one to three years. And, for this, they can consider various types of funds — income funds, gilt funds or even dynamic bond funds —depending on their risk appetite.

If you have a horizon of 12-18 months, you should look at long-term income funds or gilt funds. Chiefly because, with these funds, one can get the advantage of high coupon rates and capital appreciation once the rates start falling.

Gilt funds are usually preferred by risk-averse investors, as these invest only in government securities. These are typically free of credit risk. Gilt funds offer tenures ranging from 9-18 months. However, the low risk will garner low returns as well. This category has given a pre-tax return of six per cent over the past year ended December 30, 2011, according to Value Research, an online portal comparing mutual funds.

Comparatively, income funds have returned 8.3 per cent annually. Dynamic bond funds have given higher returns, with average annual returns at nine per cent. The category's top performers, SBI Dynamic Bond and IDFC Dynamic Bond have even given returns of 11 per cent.

Dynamic bond funds are a good bet, as they are actively managed by the fund manager. He can take a view on the market and alter his holdings regularly, choosing from corporate and government papers.

However, such high involvement of the fund manager can even prove a double-edged sword. Reason: the funds performance is largely dependent on the fund managers ability to take the right calls. A slightly longer holding period of one three years is recommended for this category.

Many may argue that with fixed deposits (FDs) giving assured annual returns of 9.25 per cent for a period of one-10 years, these score over debt MFs. However, these returns, when compared on a post-tax basis, wont seem as attractive, especially for tenures exceeding a year. The recent NHAI bonds offering 8.3 per cent for 15 years has also caught the fancy of investors.

FD returns are taxed entirely at slab rates. In case of debt funds, long-term capital gains (for holding over one year at the time of sale), will be taxed at 10 per cent without indexation or 20 per cent with indexation.

If you sell your investment within a year, the capital gains are added to income and taxed according to the slab applicable. However, you can choose the dividend distribution tax to circumvent this.

Here, you will be given the dividend, net of a dividend distribution tax of 14 per cent (borne by the fund house).

Remember, though, that the shadow of uncertainty looms large. Financial planners opine the rate cut has only been hinted at and not begun. Investors must, therefore, move from short- to medium-term debt funds to long-term ones, gradually and in tranches.

 

 

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

 

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. HDFC TaxSaver
  2. ICICI Prudential Tax Plan
  3. DSP BlackRock Tax Saver Fund
  4. Birla Sun Life Tax Relief '96
  5. Reliance Tax Saver (ELSS) Fund
  6. IDFC Tax Advantage (ELSS) Fund
  7. SBI Magnum Tax Gain Scheme 1993
  8. Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Current open Infra Bond Application form

 

Submit filled up application    Collection canter near you

Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...
Read more

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...
Read more

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
Read more

SBI Small Cap Fund

SBI Small Cap Fund scheme seeks to provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme by investing predominantly in a well diversified basket of equity stocks of small cap companies. SBI Small Cap Fund has widened its margin of outperformance relative to its category and benchmark in the last one year, earning itself a five-star rating. The fund shows a hefty 18 percentage-point outperformance relative to its peers in the last one year, 5 percentage points over three years and 4 percentage points over five years. Needless to say, it has also outpaced its benchmark to deliver convincing five-year annualised returns of 37 per cent. A believer in the credo that a small market cap does not reflect business quality, the fund looks for five attributes in the stocks it buys: competitive advantage, return on capital, growth, management and valuation. SBI Small Cap Fund is among the few in this space to remain at quite a man...
Read more

Myths about Exchange Traded Funds (ETFs)

1) ETFs Are Similar to Individual Stocks: Like MFs, ETF consist of an underlying portfolio of securities that's designed to follow a specific index or investment strategy. Hence, they are as diversified as various mutual funds. 2) ETFs Only Invest in Equity: Since they are listed on the exchange, the general belief is that ETF only consists of equity asset class. Globally, ETFs are available across asset classes – equity, debt, commodities, real estate and so on. In fact, over the past couple of years, India has also seen the emergence of Gold ETFs. 3) All ETFs Are Index Funds: ETF started as a fund which used to track indices and hence they were branded as index funds that are listed. However, ETFs have progressed rapidly and are no longer associated only with passive index funds. Globally, we have seen the launch of actively-managed ETFs. In India, also we recently saw the emer gence of fundamentally-weighted ETFs on Nifty, which busts the myth that ETFs are index funds and can...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now