Top and Best Debt Mutual Funds in India for 2018

By | April 28, 2017

As we all know Mutual funds are something where people invest to save tax as they have surplus money which they just don’t want to let go simply by paying tax and want long term benefits which they usually don’t get by investing in other schemes whereas Debt Mutual Funds can give better returns than saving bank accounts and bank deposits.

Fixed Deposits might have assured returns but Debt Mutual Funds have higher tax returns. Here are some ways that can help you choose best Debt Mutual Funds options to invest in.

Before investing in mutual funds, you can calculate your return at SIP Calculator.

Its important to have a financial goal before investing, that how much and when you require money. Then there should be proper asset allocation as per planning, it is necessary to focus on returns after deciding all this a person should know how much investment should be done?

mutual funds

mutual funds

Before investing in Debt Mutual Funds you should take care of following points:

  • Duration
  • Credit Risk
  • Average Maturity
  • Tax

For Debt Mutual Funds Taxation you can have Short Term Capital Gain if holding period is less than 3 years and Long Term Capital Gain if holding period is more than 3 years and the tax rate may vary accordingly.

You can also view Top 10 Mutual Funds in India.

Debt Mutual Funds invest in Treasury bills, Government securities, Certificate of Deposits (CDs), Commercial Papers (CPs), Bonds, money market instruments and much more.  To choose best Debt Mutual Funds among all it is important to keep certain points in mind.

  1. The foremost priority should be safety which implies that there should be less credit risk and modified duration.
  2. For average maturity, it should be taken care of that there should not be any liability that is sufficient non-volatile asset class should be there.

The Debt Mutual Funds are of two types: Short term and Long Term. Short Term Mutual Funds are further classified as:

Ultra Short Term: They mature from a period of 3 months to 3 years.

Best Ultra Short Term Funds are Birla Sun Life Floating Rate Fund and IDFC.

Short Term Fund: These mature from 6 months to 6 years. Best plans are Birla Sun Life and Escorts short term funds.

Guilt Short Term: They invest in Government of India Bond and mature from 2 to 5 years. The best in this category are SBI Magnum Gilt Fund and IDFC Government Securities Fund.

After Short Term Debt Mutual Funds comes the Gilt Medium and Long Term Mutual Funds:

These funds invest in long term Government Bonds and have a maturity period of 1 to 5 years. The best plan among all is SBI Magnum Gilt Fund– Long Term Plan and L&T Gilt Fund– Investment Plan.

Apart from this, there is also Income Mutual Funds that invest in Government Bonds, Corporate Bonds and Money Market Instruments with a maturity period of few months to 17 years.

Best Income Funds are HDFC Medium Term Opportunities Fund and ICICI Pru Banking and PSU Debt Fund.

Its your duty to study and analyse all the plans and policies before investing as mutual funds are subject to market risk, therefore, it is necessary to read the documents carefully.

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