Top 10 Debt funds

Presented By:

Devesh Anand

Geetika Srivastav

Manmeet Kaur

Rajlakshmi Gupta

Debt Fund
Invest in debt instruments issued not only by government, but also by private companies, banks and financial institutions and other entities such as infrastructure companies/utilities. Target low risk and stable income for the investor. Have higher price fluctuation as compared to money market funds due to interest rate fluctuation. Have a higher risk of default by borrowers as compared to Gilt funds. Debt funds can be categorized further based on their risk profiles. Carry bothcredit risk and interest rate risks.

Debt fund in India

1. Monthly Income Plans: These are funds that primarily invest in debt instruments, and try to give you a monthly income in the form of dividends. The income is not guaranteed of course, and they only pay out a dividend if they are profitable for that time period. This type of a debt fund is for people who have a big corpus initially, and would like to generate a monthly income for them with low to moderate risk.

2. Capital Protection Plans:Capital Protection Plans are debt instruments that guarantee your capital, and then invest a portion of the funds in equity in the hopes of generating excess returns

3. Gilt Funds:Gilt Funds invest in government debt viz. the debt issued by Reserve Bank of India on behalf of the government. They also invest in securities issued by state governments Gilt funds can be short term gilt funds, or long term gilt funds. The short term Gilt Funds are meant for people looking to invest their money for shorter durations of say 3 6 months.

4. Fixed Maturity Plans (FMPs):Fixed Maturity Plans (FMPs) are quite similar to fixed deposits in the sense that these funds are usually close ended, which saves you from interest rate risk. The way the fund works is that a fund house announces a new fund offer specifying the duration of the fund say 18 months or so, and then they collect money from investors which is then invested in debt of the same duration. These funds have become popular because of a sort of a tax

5. Liquid Funds:Liquid Funds are funds that are used by investors for extremely short time durations, and in most cases instead of a savings account. The current savings account interest rate is 3.5% per annum, whereas funds like the SBI Magnum Cash Liquid Float, LIC MF Liquid Fund and JM High Liquidity Fund have returned 5% since last year. These funds are not meant to keep money in for longer durations because these same funds return in the range of 6.5% when you look at their returns for the past 3 years.

6. Floating Rate Funds:Floating rate funds are funds that invest in floating rate debt instruments, and can invest in government and corporate securities. You can have a short term floating rate fund, or a long term floating rate fund. A look at the top floater plans on theMoney control pageshows that the 1 year return for the funds that performed in the last year range in 5.3 to 6.1% area, and the 3 year returns range between 6.9% to 7.9%. Other long term and short term funds: Outside of the categories mentioned above there are debt funds that target long term debt, or short term debt, but may not be strictly a liquid fund, or a floating rate fund.

ICICI Pru Gilt Inv PF-G

CANARA ROBECO INCOME G

ICICI GILT PRUDENTIAL G

ICICI Pru Income Inst-G

Sahara Income-G

BNP Paribas Flexi Debt RegG

JM Short Term Reg-G

Templeton India ST Income Inst-G

BSL Dynamic Bond Ret-G

Escorts Gilt-G