Skip to main content

Debt Funds now Invest more in G-secs

Anticipations of rate cuts are making debt funds pump money into sovereign bonds. Also, gilt funds have gained new fan-following

The rate cut by the RBI of 50 basis points in 2015 has increased the AUM of as well as the inflows into gilt funds. Further anticipations of rate cuts have increased the demand for gilt funds, making investors pump in money for better returns.

 

According to March 2015 data, open-ended income funds have also invested in long term government bonds as corporate bonds generally have a maturity of maximum five years. In 2014, SBI Dynamic Bond Fund had invested 5.92 per cent of its AUM in G-secs, whereas in 2015 it has invested 90.92 per cent, depicting that fund managers are moving towards g-secs for longer-tenure investments. In March 2015, IDFC Super Saver Income Fund has invested 99.14 per cent of its AUM in government securities.

 

According to AMFI data, in March 2015, the inflow into gilt funds was R2,385 crore, which is the second highest since January 2013. Also, the funds have witnessed positive net flows of R8,581 crore in the last six months. In March, the AUM of gilt funds was R14,614 crore, which is the highest since 2004. Gilt medium- and long-term funds have outperformed income funds as their one-year returns are 17.44 per cent, whereas income funds' one-year return is 13.45 per cent.

Gilt funds are funds that invest in government securities (G-secs) issued by the Reserve Bank of India on behalf of the government. Gilt funds are an avenue for retail investors to participate in the market.

Gilt funds are ideal for those who want more safety for their investments or are risk-averse and, at the same time, are looking for reasonable returns on their money. This may be considered as the ideal time to invest in these funds as there is an inverse relationship between bond prices and interest rates. A fall in interest rates leads to a rise in bond prices and vice versa.

Asset Allocation of Income Funds in Government Bonds

 

Scheme Name

31/03/2015

31/03/2014

Difference (% points)

SBI Dynamic Bond Fund

90.92

5.92

85

IDFC Super Saver Income Fund - Investment Plan

99.14

16.54

82.6

SBI Magnum Income Fund

79.77

5.94

73.83

HSBC Flexi Debt Fund

82.12

15.84

66.28

Religare Invesco Active Income Fund

84.77

38.8

45.97

DSP BlackRock Strategic Bond Fund

57.02

21.6

35.42

Axis Income Fund

53.09

25.21

27.88

L&T Flexi Bond Fund

57.23

30.31

26.92

Axis Dynamic Bond Fund

39.01

19.46

19.55

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

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

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

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...

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 ...

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...

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...

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....
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