Skip to main content

Debt Mutual Funds with SIPs

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 

Fixed- income investors are not used to surprises, but the bond market this past year has been full of them (nasty ones). In the last few months, the 10- year GSec has been gyrating sharply and has crossed the 9- per centyield mark four times. Fund managers often get caught on the wrong foot when yields shoot up, as it hits bond NAVs. Returns from bond funds in the past six months have been choppy.

So it is little surprise, that the disparity between the best and worst performers has also widened, even within the same category of funds, say, longterm bond funds. In the last six months, the best performer has returned 4.38 per cent, whereas the worst performer has returned - 9.67 per cent, a 500basis- point difference. Before this volatility began, at best the difference was around 100 basis points.

For fixed- income investors receiving such a hard knock of over 500 basis points is not quite the way to go. If the interest rate in the economy remains stable or heads lower, bond investors can make great money. But the last few months volatility in the bond market has proved that interest rates are anything but stable right now. The 10- year G- Sec yield has surged past the nine percent afew times in the month of November. Such rates were last seen five years ago.

For bond investors, the opposite scenario is much preferred.

Lower bond yields and rising bond prices make great returns for investors. Bond yields have been inching higher now and fund managers, but its not clear how much higher yields will go – particularly with growth slackening. The Reserve Bank of India may consider raising interest rates, but the beast of inflation still dogs the economy. If it does indeed rachet up the rates, the bond market will again see itself in choppy waters.

At such times, Systematic Investment Plans (SIPs) can race to the rescue. They allow for the spreading out at regular intervals of available investment amounts and, hence, averaging out the cost of investments.

This is chiefly used in equity investments; hence, when most investors think of a SIP they associate it with equity.

Though utilising SIPs is undoubtedly suitable for equity investment, that does not mean that investors should not look at other investments where the same strategy could yield better results.

Debt investments

When investing in debt mutual funds, a SIP can be effective in ensuring that the investment takes place in line with requirements.

This means that similar to equity mutual funds, even for debt funds utilising a SIP (staggering investments in order to average out costs) would be beneficial. It would help to compare how debt mutual funds stack up against comparable choices available.

Debt investments are those that yield a fixed rate of return. Such instruments, though, are often traded in the market; hence, an added element enters into the picture.

The range of mutual funds available in the debt field is extremely large — from liquid funds ( very short term) to income and gilt funds ( for a longer- term outlook). There are also fixed- maturity plans, closed- end schemes comparable with Fixed Deposits (FDs).

An investor can choose those found suitable, thus, ensuring that the investment matches the risk- taking ability as well as the manner in which s/ he wishes investment exposure.

Regular flow

Most people who wish to invest in different instruments, including debt mutual funds, do not have the luxury of large investment amounts available at a single point of time. They build up capital over time through regular investments and, hence, there is an element of a flow in their funds which needs to be invested in a proper manner. SIP in a debt fund would be the best way to go about this as it would ensure that a fixed sum is invested each month matching the cash flow to an individual in the form of income.

Tackling tough times

Also, the debt market is not similar across all time periods. There are periods of is a rising interest- rate scenario, pushing down overall returns for openend long- term debt funds. ( A portfolio loses value because of the fall in prices of debt instruments.) The reverse also holds true. Hence, an individual has to ensure that s/ he is invested throughout a cycle so that the benefits of an investment are actually received. This can be done through a SIP, which would ensure that the investment is made for a longer period covering both good and bad periods, thereby evening out the entire situation. A SIP is supposed to do this.

Flexibility

A SIP enables an investor to ensure a specific sum of money at a particular time in future. This is important from the point- of- view of an investor, as then s/ he can get the money when s/ he wants. Also, s/ he can change the investment to tune in to her/ his goals and to the amounts required once a SIP ends and another begins so that the amounts for investing are available. This flexibility is good for an investor as s/ he is able to make the most of the choices before them in order to meet her/ his goals.

Alternatives

Alternatives such as a recurring deposit, which investors consider for regular investment, have a specific time period, reducing flexibility compared to debt funds. Also, only a single type of exposure is available with a recurring deposit while this is multiplied with debt funds and a SIP as the choice here is wide in terms of the nature of instrument. Another point is that, once the amount of the recurring deposit is fixed, it does not provide much flexibility in terms of change depending upon varying conditions arising. The amount of an investment in a debt fund can be altered once an initial SIP is completed and another starts. FDs are not suitable for regular investments as they would increase the administrative work involved in managing multiple deposits.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

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

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

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

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. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. 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

How to generate a UAN Online

Best SIP Funds Online   In order to make Employees' Provident Fund (EPF) accounts portable, the Employees' Provident Fund Organisation (EPFO) had launched the facility of Universal Account Number (UAN ) in 2014. Having a UAN is now mandatory if you have an EPF account and are contributing to it. So far, you got this number from your employer and every time you changed jobs, you had to furnish this number to the new employer.  However, in order to make it easier for you to get a UAN , and without your employer's intervention, the EPFO now allows you to go online and generate a UAN on your own. This facility can be used by freshers, or new employees, who are joining the workforce as well as by employees who have older EPF accounts but do not have a UAN as yet. As a new employee, you can simply generate a UAN and provide the number to your employer at the time of joining, when you need to fill up forms for your EPF contribution. As per a circula...
Read more

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

Income Tax Basics for beginners

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Tax is a compulsory payment made to the Government, but there are ways to optimise it   Income tax is an instrument used by the government to achieve its social and economic objectives. Simply put, tax is duty or tariff that income earning individuals pay to the Government in exchange of certain benefits such as law and order, healthcare, education and a lot more. With proper planning, your tax liability can be reduced and optimised effectively, leaving you with a greater share of your income in your hands than being paid out as tax. Income earned in the twelve months contained in the period from 1st April to 31st March (Financial Year) is taken into account when calculating income tax. Under the Income Tax Act this period is called the previous year.   ...
Read more

HDFC Prudence Fund

Best SIP Funds to Invest Online   HDFC Prudence Fund is now HDFC Balanced Advantage Fund HDFC Prudence Fund (HPF ), the country's largest equity-oriented mutual fund scheme with assets close to Rs 37,000 crore, will now be known as HDFC Balanced Advantage Fund and can switch entirely between equities and debt. Until now, it could invest only 40-75% in equities. On 25 April, HDFC Asset Management Co. Ltd announced plans for many of its schemes, as part of the ongoing merger and re-categorisation exercise. Most other fund houses, too, have announced their plans to re-categorise their schemes. If you don't agree with your schemes' new form, you have a chance to exit without paying an exit load. Here's how you should decide what to do. Your scheme could change... If there is no change to your scheme, you have nothing to worry about. But if your scheme is about to change, check how big or small it is. For instance, if you own a large-cap fund th...
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