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Top Debt Mutual Funds to Invest for 2016

 

Best Debt Mutual Funds to Invest in India for 2016

In the current scenario of rate cuts by bank, there is not much gem left to park your funds with the banks. Investors with low risk-appetite should give a thought on investing in debt mutual funds rather than parking surplus fund in bank fixed deposit, because these funds gives better returns than fixed deposits plus liquidity is also similar to that of bank FD. There are many debt funds which are consistently giving good returns in the last 4-5 years. Let's see best mutual fund to invest in the year 2016.

How I have selected Best Debt Mutual Funds?

1. Debt Mutual Funds which are atleast 5 years old are taken into account.

2. Strongly considered ranking of value research online and only 4-5 star rated mutual funds are selected.

3. Asset Under Management (AUM) must be Rs.1,000 crore or more.

4. Debt Funds having CRISIL Ranking of less than 3 stars are weeded out.

5. Other technical ratio like expense ratio, standard deviation, sharpe ratio, alpha, beta.

 

Top Debt Mutual Funds to Invest in India in 2015

I have segregated debt mutual funds according to the time horizon of investment.

1. Liquid Debt Funds

Investment in liquid debt funds are done for a time horizon of a month or less. These funds should be used in place of savings bank account. For example if you are planning to buy a car in few months and have accumulated money for down payment than instead of keeping money in savings account you can invest in liquid debt funds which gives superior returns than savings account.

Liquid Debt Mutual Funds

2. Ultra Short Term Debt Funds

Ultra short debt funds invest in securities for a period of one month to 3 months. These funds are replacement of bank fixed deposits. For example your child marriage is going to happen in few months than you can put money in ultra-short term debt funds for better returns than bank FD.

Ultra Short Term Debt Mutual Funds


3. Short Term Debt Funds

Short term debts funds are again a good replacement for fixed deposits as these funds invests for time horizon of 3 months to 12 months. So if you are planning to buy a house with a year, then you should put money in short term debt funds rather than keeping in bank FD.

Short Term Debt Mutual Funds

4. Debt Income Funds

Debt Income funds provide a regular returns on monthly or quarterly basis instead of capital appreciation. If you have surplus money and would like to get monthly returns as salary then you can invest in debt income funds.

Debt Income Funds


5. Gilt Medium & Long Term

Gilt Medium & Long Term debt funds invest thoroughly in Government securities which offer moderate returns with optimum safety. Due to fall in the interest rates, returns from these funds are on rise.

Gilt Debt Mutual Funds

 

Conclusion

Investing in debt mutual funds give tax edge over bank fixed deposit as debt funds held for 36 months is eligible for indexation benefit and tax on such funds becomes very low. Further, debts funds are equally liquid to that of bank fixed deposits. So if debt funds can provide better returns with tax benefit and same liquidity why not go with them instead of following traditional approach of investing in bank instruments.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. IDFC Tax Advantage (ELSS) Fund

4. ICICI Prudential Long Term Equity Fund

5. Religare Tax Plan

6. Franklin India TaxShield

7. DSP BlackRock Tax Saver Fund

8. Birla Sun Life Tax Relief 96

9. Reliance Tax Saver (ELSS) Fund

10. HDFC TaxSaver

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