Skip to main content

Debt Mutual Funds better bank FDs in post tax returns

Invest Mutual Funds Online

Download Mutual Fund Application Forms

Buy Gold Mutual Funds

On an average, Post Tax, Income Mutual Funds gave 8.41%; FDs gave 6.48% at peak

INVESTMENT in income funds with investment horizon of one-year and above would have fetched you best post-tax return followed by short-term debt fund and then bank fixed deposits (FDs).

While average returns declared by debt funds were better than bank FDs, it is important to park your money in the right fund.

One-year and above income funds gave an average pre-tax return of 9.34 per cent. While highest return of 14.67 per cent was reported by Canara Robeco InDiGo fund, lowest was 4.75 per cent by Sundaram Income Plus.

These calculations are on returns based on the net asset value (NAV) as on May 22.

On the other hand, short-term debt mutual funds gave average pre-tax return of 9.21 per cent.

While highest return of 11.74 per cent was reported by Religare Short Term Plan Fund, lowest was 7.16 per cent by Mirae Asset Short Term Fund.

Short tem debt funds have a maturity period of six months to one year.

Benchmark index for calculation is Crisil short-term bond fund index. One-year return of 36 funds was analysed.

Some debt funds have been excluded in this calculation, as their benchmark index was Crisil liquid fund.

If you had invested one year ago, banks like State Bank of India (SBI) and ICICI Bank were offering interest between 8.25 per cent on one-year FDs.


Other banks were offering around 8.5-9 per cent.


Some of the smaller private banks like South India Bank, Karnataka Bank Bank and IndusInd Bank were offering interest between 99.25 per cent.

Assuming that you belong in the highest tax bracket of 30 per cent, if you would have parked your money in one-year FDs with SBI and ICICI Bank, your post-tax return would be 5.78 per cent.

Even with peak interest rate of 9.25 per cent on one-year FDs, post tax return would be 6.48 per cent, whereas, in income funds and short-term debt funds with investment above one year, long-term capital gains tax of 10 per cent without indexation is charged. This would have resulted in post-tax return of 8.41 per cent and 8.29 per cent for income and short-term debt funds, respectively.

Calculation of post tax return in debt mutual fund is complicated and based on a fixed formula. On bank FDs returns, one has pay tax depending on his tax bracket.

There is no tax paid by individual investors if he has opted for a short-term debt fund or liquid fund with dividend option. Dividend distribution tax (DDT) is paid by mutual fund companies. However, in case of growth option, where no dividends are declared and the NAV rises by the accumulated earnings of the debt fund, investor will bear only a long-term capital gains tax of 10 per cent without indexation or 20 per cent with indexation.

Income and debt funds invests in bonds, debentures, government securities and short-term instruments like commercial papers and reports.

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

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

Rs 14,000 Crore worth of tax free bonds coming soon from NHAI , PFC

  NHAI, PFC file prospectuses, coupon rate not yet decided MORE debt investment options have opened up for investors with AAA rated tax-free bonds worth over Rs 14,000 crore lined up. The National Highway Authority of India ( NHAI ) and Power Finance Corporation ( PFC ) are offering Rs 10,000 crore and Rs 4,033.13 crore worth of tax-free bonds, respectively, as per prospectuses filed with the Securities and Exchange Board of India (Sebi). Of a Rs 5,000 crore issue by PFC, Rs 966.87 crore has already been raised through private placement on September 28 and November 1. Tax-free bonds give investors tax-free return on any amount invested. In another kind of bonds, the long-term infrastructure bonds, investments up to Rs 20,000 are tax exempt, that is this cap amount can be deducted from the taxable income. Accordingly, the NHAI prospectus has clarified that only the amount of interest from -and not the actual investment on -its new bonds will be tax-free. "NHAI's publ...
Read more

Change in Fund Manager for some of HSBC Mutual Fund Schemes

Buy Gold Mutual Funds Invest Mutual Funds Online Download Mutual Fund Application Forms Call 0 94 8300 8300 (India) However, this facility is only available to Unit holders who have been assigned a folio number by the AMC.   HSBC Mutual Fund has announced that the below mentioned schemes shall be managed by the new fund managers as stated in the table. The effective date will be July 02, 2012.   Amaresh Mishra 's will be Vice President and Assistant Fund Manager. Having done a Post graduate diploma in Business Management and Bachelor of Chemical Engineering, he has over seven years of experience in Equities and Sales.   Mr. Piyush Harlalka's designation shall be Vice President- Fixed Income. Qualified as a C.A., C.S. and holding M.B.A.( Finance degree), he has over six years of experience in Fund management and ...
Read more

How EEE and EET Tax affect Retirement Investments

  An important factor while choosing a financial product is its taxation , and for retirement savings, this is even more important as the sums involved are usually life-long savings. Here's a look at the current tax treatment of three major long-term retirement planning products, which are - Employees' Provident Fund (EPF), Public Provident Fund (PPF) and National Pension System (NPS). EPF The tax treatment is EEE, which means your money is exempt from taxes at the time of investment, accumulation and withdrawal. At the time of investment, the tax deduction is under the limit of section 80C of the Income-tax Act , which is currently Rs 1.5 lakh. Partial withdrawals are also tax-free if made after 5 years of continuous service. If withdrawals are made before 5 years of service, 10% tax will be deducted at source. Exceptions have also been provided for transfer of amount and conditions wherein the subscriber is unemployed for more than 2 months or the loss of job was beyond th...
Read more

Personal Finance: You can insure your wedding

But luck may not always be on your side. With the frequency of such attacks, as also other risks and unforeseen accidents growing, a wedding insurance is something you may want to look at if a marriage is being planned in the family. Event insurance plans like this is still in its nascent stages due to low awareness. And given the sacred nature of the ritual, nobody wants to discuss or think negative. But as wedding spends and risks grow, it makes sense to cover the potential monetary loss. The policy in those countries even covers the loss of the wedding ring, the wedding gown not reaching on time and even the expenses/loss due to late or non-appearance of the photographer which may mean staging the event once again for the photograph. In India, most insurance companies — including ICICI Lombard General Insurance, Oriental Insurance, Bajaj Allianz and National Insurance — offer wedding insurance. The policy is tailor made to individual requirements and needs. The sum insur...
Read more

DSP BlackRock MidCap Fund

Best SIP Funds Online   HOW HAS DSP BlackRock Small & Mid Cap Fund PERFORMED? With a 10-year return of 14.61%, the fund has outperformed both the category average (12.34%) and the benchmark (10%) by a good margin. Should you invest in DSP BlackRock Small & Mid Cap Fund? This fund invests predominantly in mid-cap stocks but takes a sizeable exposure in small-caps as well. The focus is on nascent companies with high growth potential. The fund manager places emphasis on quality and avoids inferior businesses even if these look tempting from a valuation perspective. Over the past year, the fund portfolio has grown, having added to some of the underperforming sectors like chemicals and healthcare. Its portfolio churn has come down significantly. The heavily diversified portfolio is run completely agnostic of its benchmark index— most bets are from outside the index—which can at times lead to bouts of underperformance as seen in the recent years....
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