Skip to main content

DEBT FUNDS MORE ATTRACTIVE NOW

 
Long-term debt funds could deliver up to 15% in the next one year if rate cuts happen as expected.
 
Though equity is expected to generate better returns in the long term, most experts think that debt is a good bet in the short term. Due to the potential to generate capital gains, bonds are a good place to be in India now. This is because the interest rates are expected to come down in the coming months. The RBI may cut rates on or before the September policy review. Further rate cuts could happen in the next calendar year. We expect the 10-year government bond yield to fall to around 7.25-7.35% by March 2016 from the current 7.78%. The 10 year yield has already came down from 8.56% in the past one year (see chart).

The heightened risk in equity due to a possible FII outflow is another factor that is making experts bullish on debt now. Equity markets are at more at risk of correction than fixed income markets because foreign ownership is quite high for Indian equities as compared to bonds (less than 2% of outstanding issuances).

Since long-term bonds are more sensitive to interest rate fluctuations, investors should use the long duration funds to invest. If interest rates fall as expected, these long duration debt funds are likely to generate good returns of around 15% in the next one year (8% yield and another 7% from capital appreciation). However, longterm bonds are more volatile. If you are looking for stable returns, go for short-term bond funds. These schemes may not give very high returns because their potential to earn capital gains is limited by the shortterm bonds in their portfolio. However, they will still churn out 9% annualised returns in the next 1-2 years. Long duration debt looks better on the risk-reward basis.If debt investments are capable of generating 15% returns in one year, I need much higher return from equities. That appears unlikely in the current scenario

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

Download Mutual Any Fund Application Forms

Popular posts from this blog

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...
Read more

Good time to invest in Infrastructure Funds

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   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
Read more

Mutual Funds: Past Performance is not just everything

Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme.   But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...
Read more

PPF lock in may be extended

The Finance Ministry is considering a proposal to extending the minimum lock-in period for withdrawal from PPF from 6 to 8 years. The purpose is to attract long-term funds for infrastructure development. The time limit for maturity of PPF may also be increased from the current 15 years. The limit up to which investors can avail of tax deduction under Section 80C on investment in PPF was hiked from `1 lakh to `1.5 lakh in the previous Budget. 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 ...
Read more

To rent or to buy a home? Is a million dollar question!!

Your financial planner can help you weigh pros and cons of whether you plan to buy home in your current city or hometown THE two giant real estate deals of residential properties in prime locations in Mumbai and Delhi made to the headlines recently. Yet, with housing prices sky-rocketing post the real estate slump in 2008 properties in cities like Mumbai and Delhi are beyond the reach of the common man. Many studies reveal that over the last year the property sales in major metros have been stagnant despite the meticulous efforts put in by the real estate developers. Now, it is not rare to find clients who come to me with the notion that today renting a house is better than buying one. Buying a house is one of the biggest financial decisions one takes in an entire lifetime and the dilemma of `rent versus buy' continues to perplex many people across salary brackets. A research conducted by the Center for Economic and Policy Research in Washington, DC estimates that the fair...
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