ReLakhs.com

Personal Finance & Financial Literacy Blog in India

You are here: Home / Mutual Funds / Best Debt Mutual Funds in India – Details & Comparison

Best Debt Mutual Funds in India – Details & Comparison

Last updated: August 13, 2019 | by

Debt Mutual Funds offer several benefits. But most of the small and retail investors know little about them and prefer to invest in Fixed Deposits or Recurring Deposits.

Debt Funds can give better returns than your Savings Bank Account & Bank deposits. Safety of capital is almost the same with both the options (Debt MFs & FDs). FDs may offer you assured returns but Debt funds can offer you higher post-tax returns. (You may like reading – ‘Are Bank Fixed Deposits really safe?’)

If you have any financial goal(s) which is less than 5 years away, which can be met with 8% to 10%, rate of return (or) when you are not comfortable with high volatility (risk) then you can surely consider investing in Debt Mutual Funds.

The returns from Debt funds are mainly dependent on the ‘interest rate’ scenario that is prevailing in the economy. If interest rates are in downward trend, most of the long-term or dynamic debt mutual funds can give better returns than bank fixed deposits. RBI may not be done with ‘Interest Rate Cuts‘. We may see further rate cuts in the future based on the Inflation and Macro-economic data.

Some of the debt mutual funds especially Dynamic bond funds, Gilt funds and Long-term debt funds have given better returns than bank Fixed Deposits over the last 1 to 2 year period.

In this post, let us look at some of the top performing and best Debt Mutual Funds that you can consider for your short or medium term goals.

For details on different types of Debt mutual funds, their benefits and when to invest in debt funds, you may kindly read – ‘Debt Funds – Types, Benefits & Risk Vs Return’.

types-of-debt-mutual-funds-liquid-short-term-ultra-short-term-gilt-credit-income-opportunities-long-term-dynamic-bond-pics

Methodology to shortlist Top rated Debt Mutual Funds

I have judiciously followed the below points to select the best Debt mutual funds;

  • Funds are shortlisted based on the past performances (Returns).
  • Selection among the top rated 5 to 6 AMCs with a proven track record in Debt Funds segment.
  • Age of the funds.
  • Quantum of AUM (Assets Under Management)
  • Expense Ratio (What is Expense ratio? Expense ratio shows the amount that mutual funds charge for managing the investors’ money)
  • Exit Load.
  • Risk – Reward profile.
  • Various Risk / volatility related Ratios.
  • Based on the data available on CRISIL, Morningstar, Moneycontrol & Valueresearchonline portals.
  • The current investment portfolios of the funds.
  • The credit quality, interest rate sensitivity, modified duration & average maturity of the Funds’ portfolios have been given due importance. (If you are investing for short-term, ideally you have to pick funds which have limited/low sensitivity to interest rates. At the same time, if you are investing for medium to long-term duration, you may pick funds which have moderate to extensive sensitivity to interest rates. Funds which have high credit quality w.r.t their portfolios should be given high importance.)
  • I have tried to identify top performing Debt mutual funds based on the Fund Categories like Liquid Debt Funds, Short-Term Debt Funds, Dynamic Bond Funds, Gilt Funds, Monthly Income Plans etc.,

Top & Best Debt Mutual Funds in India for 2017

Below are some of the top performing and highly rated category-wise debt mutual funds;

Best Liquid Debt Funds 

best-liquid-funds-debt-mutual-funds-2017-pic

Liquid funds invest in highly liquid money market instruments that provide easy liquidity. The period of investment in these funds could be as short as a day. Axis Liquid fund, HDFC Liquid Fund and Birla Sunlife Cash Plus funds are some of the top performing Liquid funds. The average liquid fund category returns in the last 3 months & 1 year are, 1.5% and 6.8% respectively. Franklin India’s Treasury Management Fund & ICICI Pru Liquid plan can also be considered for very short-term goals. Liquid funds are also best suited for saving a portion of your Emergency Fund.

If you want to park your surplus cash for very short-periods say 1 to 3 months, opt for these funds. Do not invest in Liquid Funds for a longer period as these offer low single-digit returns at best. Do note that these funds may or may not outperform your savings bank Account interest rate. (I had shortlisted same funds last year too.)

Best Ultra-Short Term Debt Mutual Funds

best-ultra-short-term-debt-mutual-funds-for-2017-18-pic

The Ultra Short-term debt funds are also known as Liquid plus funds or Cash / Treasury Management Funds. They generally invest in very short term debt securities with a small portion in longer term debt securities.

I had picked DWS Ultra Short Term Fund, Franklin Ultra Short Bond Fund & Axis Banking Debt Fund last year. This year, I am replacing the DWS & Franklin funds with L&T Ultra Short Term Fund & IDFC Banking Fund. The above funds’ portfolios are of very high credit quality and have low sensitivity to interest rates.

The average category returns generated in the last 3 months and 1 year are; 2% & 7.9% respectively. If you have surplus money which needs to be invested for say 3 to 12 months, you can consider investing in these funds.

Best Short-Term Debt MFs

best-short-term-debt-mutual-funds-2017-pic

Funds investing in slightly longer duration debt securities than Ultra short term funds are referred to as Short term funds. These funds are also referred to as Short-Term Credit Opportunities funds.

I had short-listed Birla Sunlife Short-term fund and HDFC Short Term fund last year. This year, I am replacing the HDFC Short Term Fund with Axis Short term fund and also including Franklin Low Duration Fund & L&T Short Term opportunities Fund. The above funds’ portfolios are of very high credit quality and have low sensitivity to interest rates. (HDFC Short Term Fund’s portfolio has been rated as ‘medium’ in terms of credit quality.)

The average fund category returns over the last 1 and 3 years are; 8.8% & 7.9% respectively. If you have surplus money which needs to be invested for say 6 to 18 months, you can consider investing in these funds.

Top & Best Dynamic Debt Funds

best-debt-mutual-funds-income-funds-dynamic-bond-funds-long-term-debt-funds-2017-pic

They invest a major portion in various debt instruments such as bonds, corporate debentures, government securities and money market instruments of various maturities and issuers. Dynamic Bond Funds invest in debt securities of different maturity profiles. These funds are actively managed and the portfolio varies dynamically according to the interest rate view of the fund managers.

During last year’s review on Debt Funds, I had selected TATA Dynamic bond & HDFC High Interest Fund under Dynamic Bond Funds category. I am continuing with the same funds and have also included Birla Sun life Dynamic Bond Fund & ICICI Pru Dynamic Bond Fund to the tracking list.

The average returns generated by the funds which are in Dynamic & Long-term income bond funds category during last 1 and 3 years are; 9.2% & 8.8% respectively.

These funds are suitable for investors who are willing to take a relatively higher risk and have longer investment horizon (say 1 to 5 years). Invest in a Dynamic Income fund if you want to gain from both rising and falling interest rate scenarios. But, dynamic funds can have high interest rate risk associated with it.

Best Gilt Funds

best-gilt-debt-funds-top-gilt-mutual-funds-2017

Gilt Funds invest in government securities of medium and long term maturities issued by central and state governments.

During last year’s review on Debt Funds, I had selected SBI Magnum Gilt Fund, IDFC’s G-Sec Fund and & L&T Gilt funds under Gilt Funds-Intermediate to Long-Term category. I am continuing with SBI and L&T Funds, but replacing IDFC fund with HDFC Gilt Fund – Long Term plan.

The average category returns for the last 1, 3 and 5 year are; 10.08%, 9.4% and 7.8% respectively. You can consider Gilt funds in a falling interest rate scenario.

Best Monthly Income Plans / Hybrid – Debt Oriented Plans

These funds invest in a mix of Debt and Equity in the proportions of say 80:20 or 70:30 or other proportions of similar kind. The objective of these funds is to provide enhanced regular returns to risk-averse investors by taking small positions in equity assets.

For complete details on Monthly Income Plans, kindly read – “Top & Best Monthly Income Plans “.

For more details on Child Mutual Fund – Debt oriented plans, kindly read – “Children’s Gift Funds – Review“.

In most of the scenarios, investing in best debt mutual funds can be more beneficial than bank deposits, tax-free bonds and certain other fixed income securities. If you are in 20-30 per cent tax bracket, tax-efficient debt funds can be more beneficial to you than FDs. Also, if you have lump sum money to be invested in an Equity oriented Fund, you can opt for STP (Systematic Transfer Plan) from a Liquid Debt fund to an Equity fund of your choice (within same AMC).

Do you prefer to have debt mutual funds in your investment portfolio? Do you prefer investing in debt funds to bank fixed deposits? Kindly share your views.

(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Annualized returns are for Debt Funds – Regular Plans & Growth option as on 26-Oct-2016.)

Sreekanth Reddy:

Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging & property consultancy for the last 10 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider. The main aim of his blog is to "help investors take informed financial decisions." "Please note that the views given in this Blog/Comments Section/Forum are clarifications meant for reference and guidance of the readers to explore further on the topics/queries raised and take informed decisions. These should not be construed as investment advice or legal opinion."

Connect with Him : FacebookTwitterLinkedIn

  • Hi Sreekanth,
    How are you doing?
    Need one suggestion. I had invested 4lakh lumsump amount in HDFC Gilt fund-Long Term plan in Nov2016 as it was performing good at that time. But now its in loss of around 5k.
    1.Shall I keep this fund or redeem it with losses?
    2. Or will it be beneficial to start a STP from this fund to some equity fund?

    What kind of tax I need to pay in case of redemption and STP?

    Regards,
    Saurabh

    • Dear saurabh,
      I am doing good, thank you! How about you?
      The current and expected interest rate scenario may not augur that well for Gilt funds.
      May I know your investment objective (now) and time-frame??

      • I am fine Sreekanth.
        Well I do no need this money now so its a long term investment for me.

          • Thanks for you suggestion.
            Seems I was in too much hurry while writing my previous comments…lol.. Yes I mean to say I do not need this money as of now and time frame is 5+ years.
            Well I already have SIP in HDFC balanced fund. How about starting STP on any large cap fund e.g. HDFC growth fund?

              • Yes but if I am not wrong in case of STP I will have to select the same fund house. And in my case it would be HDFC only.

                If I redeem the amount and invest the whole 4 lakhs in some income fund then probably I can think of starting STP in Franklin or Birla large cap funds (depending upon which fund house I invest my money in for income fund) .

                Let me know if I am on correct path or not.

                  • Hey Sreekanth,
                    1) I hv redeemed all units of my HDFC gilt fund and invested in ABSL money manager fund direct plan. Now I want to setup STP on ABSL Focused Equity Fund – Direct Plan (G).I hv never setup an STP so need ur valulable suggestion.

                    Amount invested in money manager fund is Rs 4,40,000
                    a. How much amt of STP should I set(monthly)?
                    b. How much time period(in years) should be good?
                    c.Is Large cap ABSL Focused Equity Fund – Direct Plan (G) good to invest or should go for any Multicap or small cap fund? (Investment horizon is 5+ years)

                    2)Also I am looking ur suggestion on one more investement.Recently HDFC balanced fund has been merged with HDFC hybrid equity Fund.IS it good to stay invested with HDFC hybrid fund? Time horizon is 10+ years.

  • Hi Sreekanth,
    I would like to invest for debit fund for 3 year minimum (5 year max) due to STCG rule. Which category looks promising at the moment. I can take moderate risk. I am not interested in liquid and ultra short term fund (because I don’t want to hold them for 3 years)
    Short term, Gilt, Dynamic or MIP?

    many thanks

  • Sreekanth,

    I have surplus funds ( around 15 lacs) that I want to park for 1.5-2 years max. What would be a good option to invest? Arbitrage fund will be good? As they are like equity funds in taxation ( No LTCG post 1 year)

    Sanjay

  • Hi SreeKanth,

    Thanks for your help as always.

    I have 10 lakhs in my bank account. I have bought a house recently for which I have to pay remaining amount to builder on next 7-8 Months. So could you please suggest me some ultra short term debt fund or short term debt fund .

    Thanks in advance.
    p.s : This the extra amount after taking loan and I have kept it for registration and rest amount to be paid in jan or feb 2018.

  • Hello Sreekanth,

    Greetings !!!

    the way u have been guiding all is really appreciable. I too have a couple of queries.

    1) Which is the best scheme to invest to get huge returns after 15-20 years?
    2) Which is the best scheme to invest to get better returns after 5-6 years?
    3) Is it suggestible to enter into equity market for this?
    4) What is your opinion on “https://www.i2ifunding.com” ?

    Regards,
    Phani Nadella

  • Dear Sree,

    Hope you are well. Requesting your expert advise to invest 2,00,000 in Debt Funds as looking for investing them for 1-2 years.

    Please suggest 2 funds Short term or Ultra short term in which I can invest 1,00,000 each. Also, is it wise to make this investment in the current market condition.

    Thanks as always.

    • Dear KSam,
      You may consider Short term Income opportunities funds.
      You may consider Franklin low duration fund or Axis short term fund.
      Kindly do note that even debt funds are associated with risks and returns are not guaranteed.

      • Hello Sree,

        How come Debt funds are associated with risks? Its the investment in Govt. bonds and securities, right?
        thats the reason, they are treated as guaranteed returns.
        Please brief me out with this query.

        Looking forward.
        Phani Praveen Nadella

        • Dear Phani,
          Returns from Debt funds are not guaranteed.
          A debt fund can invest in mix of fixed income oriented securities, but there are certain risks on these also, like Default risk, credit risk, interest rate risk, etc.,
          For example : If a debt fund invests in Bonds (heavily) offered by a Pvt ltd company and if that company defaults, it can have an impact on fund’s performance.
          If you have noticed recent performance of some of the debt funds (including Liquid funds), have taken a beating…
          Kindly read this article..FYI..

  • i am having a lumpsum amount of money,which can be invested for 2 to 3 years ..which funds should i go for ?

  • Hi Srikanth,

    Thank you as always for your wonderful articles.

    I saw some news regarding debt funds and I’m so confused by that.

    Could you please explain, is it true? If true then what could happen? And what is your take?

    Here is the link:
    https://goo.gl/94kMFi

    Thanks
    Rajesh

    • Dear Rajesh,
      Let’s first understand the fact that even Debt funds are prone to various market risks.
      The article talks about risks on both Debt as well as Equity funds.
      Hence, if one is investing for short term, advisable not to chase for returns aggressively and can keep things as simple as possible.

      • Thanks Srikanth,

        Actually I have created my fixed income portion of my portfolio in liquid and short term funds with short to long term view. Ex. 1-10 years..
        Please suggest should I continue to invest in these or any other options you would suggest.
        Current funds are:

        1) Birla sun Life short term fund
        2) ICICI Pru banking & psu debt fund
        3) ICICI Pru liquid fund

        Thanks

  • I have around 20 lakhs savings in bank account. I am looking for investment options gives interest better than FD. I already have PPF account, and I am not interested in real estate. I am thinking to find good Debt based funds to expect at least 10% return. Or somebody suggesting Govt Bonds, not sure how to approach.

    And my investment horizon is 10 years.

  • Dear Shreekanth,
    I hv an investment in Birla Sun Life Dynamic Bond Fund – Regular Plan – Dividend (Dividend reinvestment plan) NAV 11.76, Amount-5lakhs approx. Couple of days ago it fell 6% in a day ,what do I do ,shud I book loss & go to another better debt or balanced fund scheme… if so plz suggest which one.
    thanks

        • Dear Nishanth,
          All types of mutual funds (Equity / Debt / Hybrid) are subject to risks.
          Also, the debt funds may not give the kind of returns they had given in the last couple of years. So, let’s have slightly realistic expectations.
          For 2 to 3 year horizon, definite NO to Equity balanced funds.
          Ideally dynamic funds can be for little longer period. Continue with dynamic fund if you are ready to accept the risks.

  • hi Sreekanth,
    hru? I was checking the returns of liquid and UST debt funds. the returns for the period of 3 months is only around 1.7%. should I park the lumpsum amount in liquid fund for 3 months timeframe? Is it not wise to keep it in saving bank a/c only with sweep-in facility. Even after tax, it’s return more than the return of liquid funds!

    regards.

    • Dear Yavika,
      Personally, for very short period horizon, I do not like to chase returns. Safety of capital can be given high priority 🙂
      Savings bank account interest rate is generally 4% per annum, so in most of the cases liquid funds can give better returns than bank savings a/c rate.

      • ok..thank you. Even I was thinking of the same. as i said earlier, I have around 25lakhs surplus which I want to invest in Equity MFs over a period of 3months. Till then, I was wondering if I need to put in Liquid or Ultra short term debt fund.
        I think I will keep in bank account only. and invest in MFs as early as possible.
        thanks

  • Hello sir,

    My mother wants to invest in MFs as the FD rates are coming down. Which of the fund type will you suggest? She is a very risk averse person and is looking for a 5 yr period. Basic objective is wealth generation and getting better returns than FD.. She can invest a lumpsum amount, but will it be better to get an MIP type FD and invest the interest in an SIP, to safeguard the principal?

  • Hi Sreekant ,
    I am new to Mutual fund and i want to invest Rs 3000 per month and want to invest in ultra short term debt fund ,which fund is suitable kindly advice me.

  • Hi Sree,
    I am an NRI. Can I consider BSL MIP Wealth 25 plan for SWP? I would like to invest a lumpsom and withdraw 8% as monthly SWP. Hope this will keep the lumpsom as it is.

  • Hi Sreekanth, very nice article on debt funds…which clearly explains each of the category. I have lumpsum of 30lakhs, which i want to put in Liquid/ultra short term debt funds and invest in mutual funds over a period of 12-18months. this is for long term wealth creation only…more than 10yrs. I have shortlisted few funds, I kindly request you to go through and suggest if any changes need to be made.

    Lumpsum in Short term debt:
    BSL short term fund
    Franklin India low duration fund
    Liquid Fund:
    BSL cash plus
    HDFC liq. fund

    Later I would transfer into this portfolio

    Large cap
    BSL Frontline eq & Kotak Select (also considering SBI Blue chip)

    Multi Cap (little confused over which to select out of these)
    ICICI Val discovery fund(invested 2.5 l)
    Mirae Asset (I) opp fund
    Franklin Ind Prima Plus or L&T Ind val(G)

    Midcap/Small cap
    DSP BR Micro (already invested 4.5l)

    Dynamic Fund
    ICICI Pru Long term fund

    Now, apart from this I want to invest via SIP Rs 1,00,000, which I will use to meet all my forth coming goals like education, vacation, etc. Already own a house (EMI 32000/-) Next near term goal is son’s graduation (5 yrs from now).
    My planned SIP portfolio
    BSL Top 100(already have sip, should i continue or change) or SBI blue chip
    Mirae Asset (I) emerging bluechip
    HDFC Midcap opp
    Franklin Ind Smaller companies
    BSL Dynamic

    should I add BSL short term in my SIP portfolio? At present I am planning only 20% in debt funds in both portfolios. should I increase it?

    Please advice me if I have to rebalance it. I already had invested some lumpsum and also running few sip’s. Now, I am rebalancing as I received this surplus. I would be discontinuing few of my old investment and do fresh. that’s why I am trying to get some advice. thank you.

    regards
    Yavika

    • Dear Yavika,
      So, you are planning to execute STPs (Systematic Transfer plan). But do note that Liquid funds or Ultras short term funds do come with certain amount of risk.
      To do STP, the funds should be from the same AMC/fund house.
      For ex: BSL short term fund to BSL frontline. This is allowed.
      The shortlised funds are good ones. But when selecting funds from the same category, you may check for portfolio overlap and then take decision.
      Son’s higher education goal :
      As time-frame is around 5 years, you can consider Birla Top 100 and one Equity oriented balanced fund. Advisable to avoid mid/small cap funds.

      • Hi Sreekanth,
        Thank you very much for the prompt reply. I really appreciate your efforts in going through everyone’s query and answering it in the best way!
        I will not do STP for all, but manually redeem and re- invest. For education, should I just go with BSL top 100 and one balanced fund? Or 50% : 50% / 60%:40% Debt:Equity portfolio ?

        I’ll definitely go through portfolio overlap link! And other articles…. Very informative indeed.

        Thank you.
        Regards

        • Dear Yavika,
          Why do you want to invest in Debt funds and then manually re-deem the units and re-invest the lump sum amount in Equity funds ?
          You may consider those two funds and remain invested for next 3 years or so. As the goal year approaches, you may review your portfolio performance Vs Goal amount and re-balance the portfolio, you can gradually move to safer investment avenues.

          • Hi Sreekanth,
            I think I mixed up my reply last time….I was talking about the lumpsum amount(30lakhs) i want to put in Liquid/ultra short term and over a period of 12-18months re-invest in Equity MFs(either STP or SIP way).

            As far as Education purpose, i was asking if I should follow
            1. Birla Top 100 and one Balanced fund or
            2. go for Debt: Equity portfolio in the ratio of 50%-50% or 60%-40% . These would be my SIPs and I will not redeem in between. I will remain invested for 5 yrs with minimum rebalancing.

            thanks and regards

            • SIPs will be from monthly salary and not from this lumpsum!!! Lumpasum is only for wealth creation. All the other goals will be through my monthly SIPs from salary.

            • Dear Yavika,
              Ok. But why would you like to wait for 18 months to invest in Equity? Any specific purpose?
              Balanced fund can server purpose of equity to debt allocation. So, you may allocate more monies to balanced fund and small portion to Large cap fund (birla fund).

              • Hi Sreekanth,

                What is the tax treatment/implications for doing an STP from a liquid fund to an equity fund?
                If one wants to park lumpsum money (like yr-end bonus) in liquid funds and then do STP, should one opt for liquid-growth or liquid-dividend-reinvest option, to minimize tax implication?

                Also, on a separate note, if i want to invest in debt funds for the long term (>10 yrs) with the purpose of balancing my portfolio to have some debt investments, can you plz advise if i should put it in short-term-debt funds, or dynamic-bond funds, if safety of my capital is more important than returns? Can you recommend some funds, and why?

                • Dear Hanoz,
                  Keep it simple! Growth option can be considered.
                  STPs are treated as normal redemptions. So, taxes on capital gains can be applicable.
                  Read : MF Taxation rules.
                  Ideally, dynamic bonds. But if safety is your priority then Short term debt funds.
                  But do note that even Liquid funds are subject to certain amount of risk. Same is the case with ST bond funds.
                  Suggested article : What are Arbitrage Funds?

  • thanks Sreekanth. by July 2018 I shall purchase/built our house where I shall spend my savings. could you please suggest where should I invest 1,30000 for 12-15 months and get tax benefit having maximum return? and please let me know if online options of investing are there. thanks again for your response.

    • Dear debkumar,
      If you need this money in 12 months or so, advisable not to take any high risk. You may consider investing in a mix of Bank FDs + Arbitrage fund (small portion).
      In case, if you understand the risks associated with debt funds, you may consider Liquid fund or Ultra short term debt fund.

  • hi Sreekanth I learn from your blog. I’ve two questions. 1 I have rs 100000 in my account which I want to invest and I would redeem it after 12 months. suggest me the best possible. 2 during 2017-18 financial year my gross income would be about 4,80000 and I am a visually impaired person so my taxable income will be 4,80000-4,25000 equal 50000. presently, I deduct 24000 at my pf account. may I increase it adding 31000 or something better options are there. next year I would like to start built my house. and I would not take loan. please suggest.

    • Dear debkumar,
      Besides tax saving, may I know your other financial goals / objectives?
      For 1 year term – You may consider Short term debt fund or an Arbitrage fund (hold for just over 12 months to get tax free return). But kindly understand the risks associated with both products before investing.

  • Hi Srikanth – Last 17 years all my savings I am investing in FD and accumulated around 50L. However, it is very disappointing now after seeing the current interest rates. Moreover, I am in 30% tax bracket.

    After seeing your blog, I would like to slowly switch over to debt mutual fund from FD. My investment horizon is minimum 5 years.

    Could you please suggest some debt mutual fund and the amount to start with? My 10L Rupees in FD will be expired next month.

    Kindly advise

      • Hi Sreekanth – Thank you for your reply.

        I am 41 years old and would like to retire in another 9 years. I don’t think I can work more than that
        due to work pressure.

        I have already accumulated the following

        Fixed Deposit – 50L
        PF – 25L
        PPF – 16L (for both for my wife and myself)
        Mutual Fund – 4L

        Moreover, currently I am actively investing on the following.

        PPF – 3L per year(for my wife and myself)
        Mutual Fund – Using Monthly SIP method
        L&T Equity Fund – 5000
        Quantum Long Term Equity Fund – 5000
        VPF – Rs.40000 Per month(Voluntary Profident Fund)
        PF – Rs.10000(Eveymonth automatically deducted from my salary)

        I don’t have any loan as of now. I would like to have 4crores in hand at the time of retirement which includes all my expenses like
        Kids education and marriage expenses and retirement funds etc.

        My elder kid is studying only sixth standard now. Hence, I don’t find any near time big expenses.

        Note: My current take home salary after deducting the above VPF is Rs.1L.

        Kindly advise.

        Thanks,
        Dennison

  • Hello Sreekanth,
    We are looking to invest 17 Lakhs to generate monthly income for our mother, at present this amount is in FD at 10% generating a monthly income of about 14000. These are about to mature in a month. Seeing the interest rate being offered by banks, where should we invest this amount? Risk taking is not an option. Please advice at your earliest.
    Thanks,
    Meena

  • Hi Sreekanth,

    I had asked you a few days ago about good ways of investment for a time horizon of 2-3 years. You had suggested me accordingly and as suggested by you to go ahead, I am planning and also have read the links provided by you to read. After reading them, I want to ask you about lump-sum investment in gilt funds for a time horizon of 3 years now as it is a downward interest rate scenario of banks. Should I invest now in Gilt funds (lump-sum) or should I wait for some more time to let the interest rate of banks to fall further down?

    Thank You…

  • Hi

    I am planning to buy a car. As per my planning I would pay the half amount as down payment and plan to take an auto loan for the other half for around 3 years.

    Is it wise to put the amount equivalent to the loan amount into a debt MF and pay the EMIs from that amount? This way I can take care of the interest that I pay on the auto loan + I have the liquidity when I need.

    Also according to you which debt MF should I look at for the investment?

      • Hi,

        The only reason for going for a car loan is to take the benefit of deduction of interest from business income and also to keep liquidity at hand. I might also make prepayments through the tenure of the loan as well.

        What is your view?

  • Hi

    Based on the current debt market, can you please let me know for a 3.5- 4.5 year period horizon which one of these would be better – for investment of around 1.5L (if its ok I can do lump sum)
    -> Birla Sun Life Short Term fund
    -> Birla Sun life Dynamic bond
    -> SBI Magnum short term gilt (thought you have not suggested, performance looks ok)
    -> Bir Sun life MIP Wealth (This I believe has more risk)

    My current portfolio apart from this –
    1. SBI Magnum Taxgain (R) – 50 K invested (No more investment in this)
    2. Axis Long Term Equity (Direct) – For my tax saving
    3. Franklin Prima Plus direct – Wealth Creation long term goals
    4. Tata Balanced Fund direct – Wealth Creation long term goals
    5. Bir Sun life MIP Wealth direct – Did Lump sum 50 K – for short term goals.

    I am planning to add either one of these – please suggest- for long term
    ICICI Prudential Value Discovery
    or
    Franklin India Smaller Companies Fund

    Please let me know if you think this needs any tweaking.

    JJ

      • Thank you for the response.

        I shall take this as this as the portfolio –

        1. SBI Magnum Taxgain (R) – 50 K invested (No more investment in this)
        2. Axis Long Term Equity (Direct) – For my tax saving
        3. Franklin Prima Plus direct – Wealth Creation long term goals
        4. Tata Balanced Fund direct – Wealth Creation long term goals
        5. Bir Sun life MIP Wealth direct – Did Lump sum 50 K – for short term goals.
        6. Franklin Smaller cos fund – Will start new investment
        7. Birla Sun life Dynamic bond – will do a lump sum 1.5L for short term goals.

        Please let me know if this is good. Should remove or add any to this ?
        I shall go through more on the article about how to pick right fund.

        Portfolio overlap is around 15% in most cases except for Franklin Prim – Tata Balanced which has 30% now, when I started investment I do not remember in 30s. I hope 30% is not a big problem – Please suggest.

        Thank you and appreciate your time and valuable expert help that you are doing for us 🙂

  • Dear Sreekanth,

    Thanks for your detailed post on mutual fund. I want to start SIP in debt MFs, since I might need to redeem my investment in 8-9month horizon. I have done some one time investment in IDFC Ultra shirt term-growth, ICICI Pru Short term plan -growth, BSL Treasury Optimiser plan and ICICI Pru Flexible income-growth. And one SIP of 5K in ICICI Pru Short Term Plan. Kindly suggest some good funds for SIP keeping in mind my investment horizon of 8-9 months.

    Regards,
    Debalina

  • Dear sreekanth thanks for detailed article for understanding about MF.

    I am a NRI & already invested in Equity MF by SIP in different AMC.
    Now i have 3Lakhs surplus amount and want to invest in DEBT MF. My Time Horizon 8-10Yrs. My picks are below for 1Lakh /Each
    1) ICICI pru banking & PSU Debt MF-Direct
    2) Franklin India low duration -Direct
    3) ICICI Pru Long term -Dynamic bond direct

    Pls. Advice…..which is advisable to invest lumpsum or SIP in Debt MF?

      • My Equity funds below… investing by SIP method

        1)ICICI pru value discovery DG-Rs4000 from Feb2016 onwards
        2)TATA Balanced DG – Rs3500 from June2016 onwards
        3) Franklin India smaller Cos DG – Rs4000 from Sep.2015 onwards
        4) Franklin India High Growth DG – Rs3000 from Sep.2015 onwards
        5) DSP BR Micro cap DG – Rs3000 from Mar.2016 onwards
        6) Sundaram select micro cap fund – Lumpsum – Rs1Lakh

        My time Horizon is 10Yrs. If Investing in DEBT for long time is not best option, then pls suggest me good solution…. Last week DEBT market also fall……
        If STP is good, then suggest funds from Franklin, ICICI or TATA AMC.
        Thanks in advance

  • Hello,
    I want to invest 5 lakhs for tax saving purpose. I was considering Tax Saving FD for 5 years. But after reading your blog about Debt funds, it changed my mind. Can you suggest a good mix of Debt and Arbitrage funds? Also what proportion should I invest in both type of funds.

    Thanks,

  • hi,

    GILT funds after RBI no cut announcements in last two quarters are giving negative performances. I am loosing some amount in pure gilt fund parked 3 months back.

    suggest way out in DEBT fund.

      • I have also invested in gilt funds just before the correction. But facing heavy loss now. I invested for a time frame of about 1 year. Should i consider holding it or should i book loss and redeem. I really dont want to face further losses.

        • Dear Sachin ..Yes, this is due to expectation mismatch.
          RBI has clearly stated in its last policy review that interest rate cuts may not happen in near future.
          If your investment time-frame is around 1 year, suggest you to switch to Short term debt fund.

          • Does it make sense to hold if i can keep it for 3 years?
            Actually that was my additional savings which i parked. I can make it to 3 years if its not risky. Please advice.

            • Dear Sachin,
              RBI may not cut interest rates in near future and even if they cut, they wont be deep enough.
              So, it may be unrealistic to expect abnormal returns from Debt funds (especially Gilt based funds) in the next couple of years, when compared to debt funds’ performance over the last 2 to 4 years.

  • Hi Sreekanth,

    Am an admirer of your knowledge and style of sharing information. I am currently grapling with a question, I want to invest in debt, my income is below 5 Lakhs as I have given up my job. If I invest in debt, for long term, I will pay tax much above my tax bracket however this investment option is much less risky in current environment . I have to otherwise invest in FDs. I have about 10 Lakhs I would like to invest for my future , atleast 3 years from now.

      • Thanks Sreekanth,my inference from your reply is even after paying LTCG with imdexation benefit the returns on your suggested type of funds is likely to be more than what I get from my FDs for tenure of 3 years. I.e if FD rate is 7 percent, annual comp. my effective yield is 6.65% (7%*95%) Vs for average Debt fund in ultra short term category return is likely to be at rate of 9% and post tax this would be around 6% per annum, please advise?Am I missing something? My concern basically rises from my lower future tax bracket as compared to LTCG liability in debt fund

  • Srikantji,
    Plese suggest me any correction if required on my SIP portfolio.

    1) HDFC Mid cap opportunity 15000
    2) Birla sunlife value fund 15000
    3) Franklin india high growth 15000
    5) Franklin india smaller com 15000
    6) Motilal oswal most focused 35 15000
    7) ICICI pru focused bluchip 15000
    8) ICICI pru value discovery 15000
    9) IDFC premiur equity 10000

    10) ICICI pru long term growth fund Lump sum 500000

    My investment horizon is more then 5 years,
    Some of above SIPs I have been doing since 4-5 years.

    I have plan to invest more on long term debt fund in this year.

    Please suggest me for any changes if required.

    Thanks in advance.

      • Hello, as you can see my all current investment is in equity funds only , I want to diversify it by investing some in debt fund as bank FD rates are.too low.
        What about my equity sip? Any suggestions?
        Thanks
        Di esh

        • Dear Dinesh,
          You may consider adding an equity oriented balanced fund to your portfolio.
          Kindly check portfolio overlap among the funds which are from same fund category and in case of high overlap you may trim your portfolio a bit.
          You may discontinue IDFC premier fund.
          May I know your investment time-frame for debt funds?

          • Hi Sreekanth,

            Thanks for reply.
            My time frame for debt fund investment is >5 years.
            I have been investing in IDFC pre. equity for last 5 years, my return is around 16%, I read somewhere about change in fund manager for this scheme, and this may improve the performance of scheme, I though to wait for some time and see before churning.
            But if you think I should stop it then I will stop and start Mira emergine blue chip fund .

            Thanks,
            Dinesh

  • Hi my name is Deepak 29 yrs old married man
    Can you help me out regarding my Mutual fund Portfolio
    My Currnetly Portfolio :

    DSP BR Micro-Cap Fund (G) (Growth) – 1000
    Canara Robeco Emerging Equities (G) (Growth) -1000
    Birla Sun Life Frontline Equity Fund (G) (Growth) -3000
    Mirae Asset Emerging Bluechip Fund (G) (Growth) – 1000
    Tata Balanced Fund – Regular (G) (Growth) -1500
    ICICI Prudential Value Discovery Fund (G) -2000

    Total current cost:1,00,000

    I have started my monthly SIP in above mutual fund schemes before one year. As you have seen i have purchased too may schmes
    Investing in too many funds will not help me gain maximum profit,So i have decided to close some scheme
    for e.g I am planning to close either DSP BR Micro-Cap Fund (G) (Growth) – 1000 or
    Canara Robeco Emerging Equities (G) (Growth) -1000 and contine with one schme with monthly sip 2000 Because both the schmes are in Small & Mid cap

    Kindly advice me which should i close and contine.
    My risk taking ability is Moderate and I have a long term wealth creation horizon(10 Years Or More than 10 Years)

    Also in this year (2017) i am going to take home loan of 20,00,000 Lakhs so kindly advice me accordingly

    I have selected above funds for goals
    Retirement & Child’s education and marriage –Birla Sun Life Frontline Equity Fund (G) + ICICI Prudential Value Discovery Fund (G) -2000 + Tata Balanced Fund – Regular (G) (Growth) -1500

    Wealth creation – Canara Robeco Emerging Equities (G) (Growth) -1000+DSP BR Micro-Cap Fund (G) (Growth) – 1000+Mirae Asset Emerging Bluechip Fund (G) (Growth) – 1000
    Plan your taxes — Taking Home Loan
    Short Term Goals –Planning to take Reliance money manager fund

    Thanks in advance
    Deepak B

  • Hi Sreekanth ,
    My query is I have invested in Franklin India prima plus & HDFC Top 200 -Direct 5000 per month through SIP from last 1 year .Shall I countinue or change it to some other funds.My horizon is of 10-15 years.

  • Hi sreekanth your article is very helpful for all…
    Now i have Rs25000 spare and this can be use in June 2017 for my child education fee. In this 4 month period , can i invest in debt fund…pls suggest some funds . If i redeem in 4 months any charge will deduct from AMC.
    Thanks in advance

  • Sir,
    Your input is valuable for all Indians to get attracted 4 investment. I have one query. I have been investing 3k /mnth in uti equity mf direct since last 2 yr. My time horizon is not less than 10 yr. These days this fund is not performing so well. Should I stop and switch or stay in it?

  • i have recently sold a property for 50 lakhs, seeing low the return on real estate ido not wish to invest in property, can you suggest some high fix monthly income good return plan.

  • Hi
    I would like to invest money for short term (6 months-1yr) in a low risk fund,preferably with assured returns, that can be sensitive to interest rates. What type of plan would you recommend ? Are the Gilt Funds or hybrid plans better suited for me ? if yes, which one would be a better option?

    Thanks

  • Hi Srikanth,
    Happy new year to you and your family…
    I would like to invest in Gilt funds. I want accumulate money for house construction. Period 4-5 years. Can I take SIP route to invest in Gilt funds?
    your thoughts on tax implications and any other suggestions would be appreciated.

    thanks / regards
    Mahesh prasad

        • Hi Srikanth,
          thanks for the prompt reply. Considering risk factor and 4-5 years period, thought debt funds are better than equity oriented . Please guide me if I am wrong.
          Will go with your suggestions.

          thanks / regards
          Mahesh prasad

          • Dear mahesh,
            Ok. You may consider Gilt funds or MIP funds for a 5 year horizon.
            But do note that MIP funds do invest in stocks, allocation can be in the range of 10 to 30%.
            Also, the returns from Debt funds can be nominal compared to the returns given by them during last 2-3 years.
            Read : Best MF MIP funds.

  • hii Sreekanth, i want to invest in mutual fund for long term like 10 to 15 years, i can invest 3000/- per month.
    please guide me which fund is good for me.

    Currently i am investing in 2 mutual fund:-
    1. Franklin India Smaller Companies Fund- Growth – 1000/- Per Month for 5 Years.
    2.DSP Black Rock Micro Cap Fund Regular Plan- Growth – 2000/- Per Month for 3 Years.

  • Hi Sreekanth. I am planning to invest in mutual funds from feb 2017. I am looking for short term 6 months-1 year schemes that provide medium returns with below average risk rate. Please suggest me few plans. Are the suggested liquid funds(Axis,hdfc and birla) ok for my requirement.

  • dear Sreekanth,

    i have a Fix deposit of 10 lakhs from last 5 year but i am not got good returns from FD. so please suggest me good fund for five years period.

    Thanks & regards
    S.K.patel

  • Dear Sreekanth, Your article was really nice reading. I want to invest in debt instruments EXPECTING AT LEAST 9.5 to 9.75% RETURN over a period of 36 months from January,2017 to finance my daughter’s wedding. The amount at disposal is around Rs. 3.00 lakh. PLEASE SUGGEST A PORTFOLIO FOR MY NEED. I am in the tax bracket of 30%. Looking forward to hearing at the earliest, from you Sir . Thanks & Regards. S.MITTRA

  • Dear Sir,
    Your Blogs are very good & educative. I’m new to mutual funds. I have a goal to buy a site[plot] for self use after 5 years, which may cost around 30 Lakhs [current value]. My father [retired; no pension] has 10 Lakhs & I can save 3.5 lakhs per annum. To achieve the goal, can you please advise:
    1. Should I invest lumpsum of 10L in debt funds ? if yes, can you please suggest which one ?
    2. Shall I I invest my annual savings in balanced funds ? or 5 years is short period for it ?
    Thanks in advance for your valuable advice.

    • Dear Arjun,
      May I know if your father is financially dependent on you? Does he has any other source of income?
      Have you planned for your other high priority goals? (Retirement planning etc)

      • Dear Sir,
        Yes, my father is dependent on me financially. he doesn’t have other income.
        I have not planned for retirement, but I have PF, PPF & a flat from which I’ll be getting rental income. Kindly advise.

  • Sreekanth,
    Confused between ICICI Pru Dynamic Bond and Long Term – why would a MF have 2 Dynamic bond funds? Long term looks to be better against Dynamic Bond, in terms of returns, beta, sharpe. Let me know your opinion.

    • Dear Manja,
      May be to give more options to its investors 🙂
      If one can stomach slighlty higher risk, can surely go for ICICI Long term fund instead of ICICI Dynamic bond fund.
      I believe on most of the risk stats/parameter, ICICI Dynamic bond scores few more points over it. However, the returns of long-term fund are better than icici dynamic bond fund.

  • Hi Sreekanth, I am searching for house to buy so may need liquidity in next 3-6 months depending on the real estate market condition. in this scenario, where should i invest my savings which can give me good returns. money in saving account is like dead investment. Pls suggest

  • HEllo sir muze swp plan choose karana hai..mai first time user hu..50000/- ya 100000/- invest karana chahata hu aur monthly 1000/- return chahata hu..konasa fund lena chahiye pls suggest name and detail of fund
    vijay kshirsagar

  • i would like to invest in debt mutual funds where i do not expect any loss even though there is slowy and steady growth. Please suggest two funds

  • Very Good article.Your guidance is Very useful .I came to know of your blog recently.
    I am retiring this month.My retirement fund will be Rs 85 Lacs.I have no pension.
    I have investments in
    Birla Medium term plan:Rs 10L,Holding for last 3 Yrs
    Birla MIP Wealth 25 plan:Rs 10L,Holding for last 4 Yrs
    HDFC MIP-LTP :Rs 6.40 Lacs,Holding for last 3Yrs
    ICICI Pru Bal Adv fund:Rs10.40L,Holding for last 3Yrs
    Reliance Regular Savings-Debt Plan:Rs14.50L,Holding for last 4Yrs
    Birla Sl FL Eq fund:Rs6L
    ICICI Pru Val Discovery fund:Rs6L
    Sundaram Select Mid Cap:Rs5L(Holding for last 2.5Yrs
    Religare Invesco Banking Fund:Rs7.50L,Holding for last 3Yrs
    BSL Bal 95 Fund:Rs10L,ICICI Pru Balanced Fund:Rs 6L,HDFC Prudence Fund:Rs5L
    Total invetment is Rs98L as on 15/12/16.
    I want to have a Monthly regular income of Rs 50,000 from accruals only.Capital remain as it is.
    My two sons are studying in Senoir & Junior intermediate in a residential college in Vijayawada.Their Fee per year is Rs2L each.
    I have ULIPs which generate a maturity amount of Rs25L in 2021.
    I have Mediclaim for Rs4L & Max Bupa Health Insurance for Family at Rs4L.
    I have to pay a Premium of Rs1.5L for next two years for ULIPS.
    I Have Residential plots amounting to Rs 35L in Rajahmundry.
    I have a 1150 Sqft Flat in Madhurawada,Visakhapatnam.I settle in Visakhapatnam.
    I get an amount of Rs30L from inheritance. my Father is a pension holder, aged 89.
    Please advise me how to lead a comfortable life for the next 20 Yrs.
    I will be grateful and waiting for your advise.
    My E-mail ID:[email protected]/[email protected]

      • Dear Sreekanth ji,All the funds are Growth oriented plans.Please help with your valuable suggestions.Thanking You

        • Please help me with your reply.From what funds i draw SWP? Can i top up the funds with my retirement fund?If so,in which funds i have to invest? What should be my planning for my son’s education? How to get Rs30-40,000 income per month for my household expenses.I do not have pension?
          I am retiring this month.My retirement fund will be Rs 85 Lacs.I have no pension.
          I have investments in
          Birla Medium term plan:Rs 10L,Holding for last 3 Yrs
          Birla MIP Wealth 25 plan:Rs 10L,Holding for last 4 Yrs
          HDFC MIP-LTP :Rs 6.40 Lacs,Holding for last 3Yrs
          ICICI Pru Bal Adv fund:Rs10.40L,Holding for last 3Yrs
          Reliance Regular Savings-Debt Plan:Rs14.50L,Holding for last 4Yrs
          Birla Sl FL Eq fund:Rs6L
          ICICI Pru Val Discovery fund:Rs6L
          Sundaram Select Mid Cap:Rs5L(Holding for last 2.5Yrs
          Religare Invesco Banking Fund:Rs7.50L,Holding for last 3Yrs
          BSL Bal 95 Fund:Rs10L,ICICI Pru Balanced Fund:Rs 6L,HDFC Prudence Fund:Rs5L
          Total invetment is Rs98L as on 15/12/16.
          I want to have a Monthly regular income of Rs 50,000 from accruals only. Capital remain as it is.
          My two sons are studying in Senoir & Junior intermediate in a residential college in Vijayawada.Their Fee per year is Rs2L each.
          I have ULIPs which generate a maturity amount of Rs25L in 2021.
          I have Mediclaim for Rs4L & Max Bupa Health Insurance for Family at Rs4L.
          I have to pay a Premium of Rs1.5L for next two years for ULIPS.
          I Have Residential plots amounting to Rs 35L in Rajahmundry.
          I have a 1150 Sqft Flat in Madhurawada,Visakhapatnam.I settle in Visakhapatnam.
          I get an amount of Rs30L from inheritance. my Father is a pension holder, aged 89.
          Please advise me how to lead a comfortable life for the next 20 Yrs.
          I will be grateful and waiting for your advise.
          My E-mail ID:[email protected]/[email protected]

          • Dear Konda Rama Rao ji,
            You may consider setting up SWPs in MIP funds.
            If you retiring soon and want safe/regular income then you may switch part of your Equity funds corpus to Post office MIS Scheme & Post office Sr.Citizen Scheme (if applicable).
            You may redeem your ULIPs and invest in Balanced funds for next 5 years or so.
            You may consider buying a Super top up health insurance plan.
            Read: What are Super top up health insurance plan?
            You can consider using Rs 30 L (inherited amount) to plan your Sons’ higher education. You may invest this amount in Debt funds or Arbitrage funds for the next 1 to 2 years.
            Read:
            Best Arbitrage funds.
            Best MIP Funds.

  • Hi Sreekanth,

    I am a big fan of your blog. Always use to suggest to my relatives and friends.
    I have a lump sum amount of 2-3 lakhs and i want to invest for 1-2 years. I have gone through debt funds but got confused which one in need to choose. Shall i go for SIP or lump sum. In bank i am getting hardly 7% interest and these amounts are idle. Please suggest some good MF for these idle amount.

  • Hello,

    As every body says Due to demonetisation FD rate will go down, so should I move my from FD to debt MF ?
    I comes under 20% tax slab and my investment of horizon is around 3 years ?
    This is my life saving so I want some security like FD.

    Thanks,
    Vishal

  • Dear MR. Sreekanth,

    I would like to know about the various short term and long term investment plan. Being a NRI, i am planning to invest approx 10 Lac in different type of funds. Considering the current Indian market scenario, please suggest the options and type of fund to be invested.

    Regards.
    KS.

  • I have shortlisted BSL Dynamic Bond Fund & ICICI Prudential long term fund for same from DYNAMIC DEBT BOND are they advisable for to invest of min 3 years

  • Hello Sir,
    Great ! supports to the new comers
    I am already a Equity investor ,just want to invest in some of good debt funds from dynamic or income category funds in SIP for at least 3 year of horizon, so pl. suggest.

  • Mr.Sreekanth, I am a senior citizen of 74 years. My daughter has gifted me three lacs last week. I want to invest this amount in a secure fund for 2 years to get regular income for our subsistence, Right now I am in a tax exempt income bracket. Could you please suggest. Thanks, Rangachary

    • Dear Rangacharyulu Ji,
      If you are dependent on the income generated on this amount, suggest you to kindly consider Post office MIS Scheme. The maturity term for MIS is 5 years.

  • Hello Sreekanth,

    First of all kudos to you for maintaining this blog, great blog and great insights, have been following this for some time now. After going through your blog, I feel I need to really start some financial planning. As a beginner, I need your advice. I have around 80000 rupees in my savings account now. I wish to build a portfolio of debt and equity funds. This amount is the surplus fund after my emergency fund which I have in hand for investing. Please suggest a portfolio, time frame for 1-3 years.

    Also what do you feel about trading in stock market with a trading account, what do you suggest about trading with some amount in stock market, after investing some in above portfolio as suggested.? Kindly advice.

    Sreekumar

  • Dear SreeKanth,
    I am hearing alot of news regarding falling interest rate in future due to demonetization. you wrote that gilt fund give better return in falling interest rate scenario but I hear now a days alot of news about dynamic fund is better in this situation. Which one you would suggest? DSL Dynamic fund or SBI Magnum Gilt Fund LTP?
    I want to invest minimum 1.5 years to 3.5 years. I already have enough exposure to equity but it is my 1st debit fund.
    P.S.- If I am not wrong then tax is 20% with indexation for more than 36 month holding while taxed at the my income tax slab it hold less than 36 month. Liquidity is couple of days.

  • pls suggest where to invest in around 30 lakh for 3-5 years span since I have sold my property and need to invest money. I seek around 9.5% to 10.5% return and am comfortable with mutual funds but my risk appetite is low so no equity fund or balanced finds. thanks

  • Hi Sreekanth,

    Which are the funds I can look at for investing INR 5 L , for about 4- 6 years?
    Would the investing decision change if horizon is 6 years + ?

    Aim is to maximize returns with medium risk.

    Thanks for your inputs.

    Rgds,
    sandeep

  • Hi Sreekanth, My retired father (age 70+) wants to invest 50 Lakhs (lump sum) for 3-5 yrs for growth which will be inherited by his children. (He doesn’t need income as he has enough pension). Bank FD rates are very low. What are the good debt/bond funds with low risk can give 9-10% return ? (Suggest name of funds). I know there will be more interest rate cut. Suggest some fund names to hedge.

  • Hi Sreekanth,

    I am planning to invest 4 Lakhs in STP route over one years in weekly transfers. Combinations are ICICI Long Term + ICICI Value Discovery OR HDFC High Interest Fund – Dynamic Plan + ? , can’t find any equity fund in HDFC giving decent return.. Could you suggest any other combination or any other fund house.

    Thanks
    Sreedhar

  • Dear Sreekanth,

    Am planning to invest Rs 10,000/- pm in debt fund for the duration of 1 year.

    Is there any option for direct SIP for the same? Please suggest good debt funds which i can do SIP now. Is there any risk on our principal amount?

    Thanks,

    Ganesh

    • Dear Ganesh,
      Debt funds too have certain amount of risk associated with them but not as high as say equity oriented ones.
      Also, the quantum of risk also depends on the type of debt fund. For ex- liquid funds have the least risk profile.
      Read: Types of Debt Funds – Risk Vs return.
      Are you referring to Direct plans? If yes, while investing you can just select/tick ‘direct plan’ option for the respective debt fund.
      For a 1 year horizon, you may consider Short-term debt fund.
      Also, have a look at Best Arbitrage funds..

  • Dear Mr. Sreekanth,
    What is ideal investment for 10 years in place of bank FD, as bank FD interest has fallen to around 7%.
    I wish to invest regularly, which option should I go for ?

    Thanks,
    Dinesh

  • Hi i want to invest 15l in lumsum in mf preferably for a time period of 3 years.can you suggest some of the funds to consider. Regards

  • Hi – please share your comments on DSP Income Opportunities Fund. I want to start a SIP in Debt fund for 5 years. Suggest any other option if you feel some other funds are better.

    I find its 5 year return stable.

  • Dear Sreekanth,

    Funds like ICICI Pru Long Term Fund and Kotak Mahindra Flexi Debt Plan are giving much better returns in 06 months/ 1/2 / 3 years. They are also pure Debt. Why havent you included them.

  • Dear Sreekanth,
    Kindly clarify the following points.
    1. Why top performing debit mutual funds gives two digit returns in 5 years and afterwards in 10 years it is reducing to single digit?
    2.Whether it is advisable to start SIP for the debit mutual funds for more than 10 years.
    3. How the AUM is important in selecting the mutual fund.

    Thanks

    • Dear Raveendran,
      1 – It depends on which time-peroid you are looking at. For example – the last 2 to 3 years in the last 5 years period are good for Debt funds as the interest rate cycle is in downward trend. The returns from the Debt funds are inversely related to interest rates.
      2 – Depends on your goals. Kindly note that the returns are dependent on the interest rate cycle. So, one should be aware of this, track the interest rates and accordingly has to manage the debt portfolio.
      3 – As of now, no much data exists especially w.r.t Indian MF industry on this. Personally, I do not get too much worried on this aspect.

  • Hi Sreekant

    Please let me know the best debt fund for 6 to 8 months
    Please let me know the best debt fund for 3 years.

    Amount of investment is 2 lacs in each fund.

    Regards
    Rajeev

  • Dear Mr Reddy,

    I am having some liquid money which I have kept in saving cum flexi bank account to meet the expenses of education of the children. However I want to invest about Rs 10.00 Lac in some MF giving better return . Already some money lump sum has been invested in 3-4 equity funds in the last 1-2 yrs & 3-4 SIP amounting to Rs 1000+ 2000 + 5000 are in place( monthly ).

    Return from Bank flexi account is @ 7% & I am in a income tax slab of 30 %. I want to share that I have an HUF account , through which these new investment will be made. I have a invest horizon of 3yrs say .
    kindly suggest 2-3 best MF based on past performance .
    thanks & regards

  • Hi Sreekanth,
    Previously I was investing in Bank FD, which were giving me a comparatively good interest but now I am feeling that when I am coming under 20% tax level, they are costing me more.
    Currently I have s FD which I have made for 10 years and are giving around 9% interest.

    Kindly suggest me whether to withdraw that FD and invest in some Debt fund or shall I continue with that FD.
    I want least risk and want to invest for more that 10 years.

  • Dear Srikanth,
    I want to invest 50k . I need money in 2020. Risk appetite is low. where shall i invest the amount? shall i consider FD any other thing? pls guide

  • Dear Mr. Reddy,

    My father, who has just retired wants to invest some Rs. 5.00 lac odd rupees for 6 months is s. Bank”s FD rate for 6 months is 6.75%. Is it advisable to go for SBI Savings fund instead of FD, as some official has advised him to invest in SBI savings fund, which is debt oriented liquid fund. Which one is better return wise.
    Regards
    Jatin

    • Dear Jatin ..For 6 months horizon, safety of capital and liquidity should be given more importance than returns.
      However there are certain advantages with debt funds. TDS is deducted on FDs, even if one does not withdraw the funds. In mutual funds, TDS is not applicable and taxes are not levied till the units are redeemed.
      Kindly note that 6.75% on FD would be on annual basis.

  • Sree
    Can you share your thoughts on Debt income & debt dynamic. I see that debt incomefunds have decent returns too & based on articles from other forums I see that debt income may be a better option than dynamic bonds. Pleaseshare your views.

      • Sure,Basically I’ve 3 lakhs surplus now that is matured from a fixed deposit. I also have a invest horizon of 3 years, meaning by end of 2019 I’ll be inneed of the money. So I’m looking for options to invest onlo risk MF that can possibly give better returns compared to Bank fd post tax. Currently i’m thinking to put in three buckets as below:
        HDFC Balanced
        TATA Balanced
        Birla treasury ootimizer
        I understand that I’ve stated two balanced funds and I’ve verified the portfolio overlap as well. The reason for picking balanced fund is because I’ve a 3years horizon.
        Can you please share your views, my bottom line is to have a better returns and around 3 yrs horizon.

          • Sree, thanks. If I understand correctly, it is better to lean towards more debt oriented funds than going for equity oriented funds for a period of 3 years.

  • Hi Sree,

    I am 31 years now.
    Recently started to concentrate in Financial Planning for my long term goal (Create lump sum amount after 15 years for my daughter’s education).
    I am completely new to Share market and mutual funds.

    To begin with with my investment I have set up monthly SIP on below funds (Rs.1000) from this month (Sep 2016).

    1. ICICI Pru Value Discovery (R/G)
    2. Franklin India Prima Plus (R/G)
    3. Mirae Asset Emerging Bluechip (R/G)
    4. Kotak Select Focus Fund (R/G)
    5. SBI Magnum Midcap (R/G)
    6. SBI Bluechip Fund (R/G)

    I would like to keep my portfolio as diversified. ( Large cap Equity, Mid cap equity, Small Cap Equity, Diversified Equity & Debt Funds). Will this work out?

    Can you please review my above investment plan and provide your feedback/comments/advise to continue or increase or decrease.

    Would also like to know your recommendation on Long term debt funds to invest with.

    Thanks a lot in advance.

      • Thank you for the details. I will go through your recommended posts as well. If my funds selection is not correct, should I redesign it by changing/closing the funds? And this is the first month I have done 1 SIP installment only.

        I basically look for a long term funds only to get a higher returns than short term funds, and hope debt funds also will give good returns in long term. Am I correct?

        • Dear Dhayanithy ..The debt funds returns are primarily dependent on interest rate scenario. In a falling interest rate market, the debt funds can give double digit returns else the returns can be around 8 to 10%, even in the longer run.
          You may kindly go ahead with your shortlisted funds.

  • Hi,

    Thanks for this much informative article.

    I have queries regarding liquid fund

    This question is basic, i have a observation for escort liquid fund that though it is having best return for all times in liquid fund category then why its AUM is less , why investor are not much interested in that fund…? any idea

    Thanks in advance

    • Hi Abhijit,
      There is no real answer to this. It’s like the smartphone market, apart from top players (Apple, Sammy) other have low market, maybe because of marketing, too many options, etc. Same is the case of mutual funds, Apart from big players like Birla, HDFC, etc others have their own share.

      But, I disagree with you that Escorts is having best return of all times. Since Liquid funds maturity is generally limited to 30 – 90 days, the long term returns may not provide a good picture. If you check in short term – 3 months / 6 months, leading fund house currently is Sundaram Debt STP AP – the direct version gave 6.1 returns in 3 months! However, the top spots change quite often, I choose Liquid fund based on my strategy of emergency and “Opportunity”. Former needs no explanation, the latter is the one to be utilized when markets are down then I use this to increase my investment in the corresponding Fund house Equity Funds.

      For e.g., say if I have Large/small/mid cap Equity fund from Birla (say Birla Frontline Equity) – then I will have Liquid / Ultra short from the same fund house. Now say that market is down, then I will use the Switch option from the Liquid to Equity to increase my exposure and stand better chance to earn more when markets are up. Now let say, after 1 year market have zoomed up and Frontline equity increases to 20%. If my actual need to meet my financial goals from this equity was only 12%, then I would again choose some of the balance 8% profit Switch back to Liquid for the next Oppurtunity. This way I will always have some money for Emergency and Oppurtunity.

      Now, before you jump to conclusion, there are some factors to be taken into account, Switching is akin to redeeming, you pay taxes. However, in Equity, if you choose 1 year cycle smartly, then you don’t pay any taxes.

      I am sure others will have better strategy, however, this strategy is working for me.

      • Hi Manja,

        Thank you for your reply.

        Firstly i will tell you my plan then pls suggest if you have any better idea.

        Actually i want to keep my emergency money in liquid fund & i don’t want to touch that money unless an emergency happens like job quit etc.
        This investment will be for long term.

        So, keeping emergency fund in liquid fund will be good idea…or do you have any better strategy.

        Thanks in advance.

        • I treat Emergency in three categories (call me conservative). 1. Super Urgent needs – Money needed immediately, like in 1 – 2 hours. Credit card / Savings / FD Sweep in accounts. – My Preference is Credit card. 2. Urgent need – Money that can wait for 24 hours. Again – Credit Cards / Liquid Funds / Ultra Short term. 3. Contigency Needs – Money that may be needed in 1 – 3 months. Short Term Debt funds.

          So you figure out the %age needed in each one of these.
          Cat 1: Do remember that Credit card usage should only be done if you are able to payback within the Due date. Hence, it is important to know the Due dates. Choose 2 Credit cards with due dates spaced by 20 days (typical limit of the credit cycle). The usage of Credit card is encouraged since you do not have to liquidate the Liquid / Ultra short term funds for super urgent needs and can be payed off used in next monthly salary/ income/ cash flow.

          Cat 2: Choose the best Liquid funds / Ultra short term funds. The best part of these is that you do not have any exit loads, hence, you can experiment with multiple fund houses which provide the best returns and easiness of liquidity to your bank account. Be aware that Short term Gains are taxable at your Tax bracket. Hence, withdraw only if you need. Also, don’t keep adding to this account, stick your %age. Let’s say you have decide for 10% of your portfolio in these funds, if you do not use it in 3 months, then invest the extra %age in some Equity funds, which will earn you better %age.

          Liquid and Ultra short term funds can be redeemed in 24 hours (you have to place redemption by 2 PM on a trading day). Ultra short term funds generally have slightly better return than Liquid. Post tax return of the Liquid funds may not be better than FD, but you get immediate liquidity at same %age. Typical funds I have noticed doing well are, DHFL Low Duration fund / ICICI Prudential Savings fund.

          Cat 3: Choose the short term Debt funds wisely, most of them have 30 – 90 days exit load, hence, the %age chosen should be really be used 30 – 90 days when emergency strikes. Before this you category 1 & 2 should suffice till then. Again follow the same approach of Cat 2 where excess %age is trimmed off and invested in Equities. However, some people based on the type of job security invest upto a year in this account, choose your type.

          Short term funds do take about 3 days for redemption, if I am not wrong . Calculate this into your forecast.

          Do review at the end of each month, will mean that you will be disciplined to invest in emergency and wealth creation. It will also enable you to take decision based on the risk level. Most of the time, the risk levels are conservative in nature because people do not study investments, a better knowledge will allow you to take better risk by adopting good strategies. I found valueresearchonline a good site to check the past returns. There is Moneycontrol as well as morningstar.in

          • Thank you very much for details explanation & help to understand how to invest money as per risk.

            I have already done my investment for Risk Cat 3 . So, for Risk Cat 1, I will go ahead with (Cash @Home + FD Sweep in accounts) & for Risk Cat 2 i will invest in Liquid Fund.

          • Dear Manja..Thank you for the detailed write-up on how to create and maintain an ‘Emergency Fund’. Appreciate it!.
            May I know your views on including Arbitrage fund in say Category-3??

  • Hi Sreekanth;
    great article! Actually I wanted to consult you regarding the mutual funds selection and hence tried to contact form the webpage but seems it is not working.
    may I please know your email ID so that we can continue the discussion there?

    many thanks,
    Aniruddha

  • Hi Sreekanth,

    Firstly let me compliment you on doing a great job.

    My query: I have some idle fund ( around 5 Lacs) to be parked for 3-6 months. I am in 30% Income Tax slab. Which will be the most tax efficient method. Debt ( liquid / short term) Vs Arbitrage Vs something else..

    Regards,

    Manav

      • Thanks Sreekanth.

        I am in 30% tax bracket. So take away for me: use Debt Funds for 3-6 months investment horizon. Right?

        Arbitrage funds wont be good in my case?

        Comparison of debt vs Arbitrage on taxation perspective for 3-6 month investment horizon?

        Regards

        • Manav,
          I think you should go thru the article Sreekanth mentioned – Arbitrage funds are treated as Equity funds, so there will be 15% tax for Capital gains within 1 year. But apart from that most of the Arbitrage funds also charge exit load within 30 – 90 days, watch out for it. Debt on the other hand do not have exit load generally but short term taxes are based on your tax bracket. With what I have seen Arbitrage provides less return than even Liquid fund sometimes. So based on this decide your strategy

        • Dear Manav ..For 3 to 6 months, safety of capital is of high priority rest of things are bonus (tax efficient/returns).
          You may consider Ultra-short term fund/ liquid fund.

          Dear Manja ..Thank you for sharing your views.

  • Hi Sreekanth ,

    I just planned to invest in MFs for long term, my goal is for my Kids education & my future savings(Pension). Kindly let me know which are best equity funds & Debt & liquid funds. I can invest in only SIP mode. I can invest 15-20K /month or more.Thank you.

  • Really enjoyed your article.
    Can I park Emergency Fund in debt funds? if so in Liquid or ultra short term fund?

    • Anand,
      My take will to be invest in Liquid fund as when these are redeemed, they are transfered to your bank account within 24 hours. However, if your emergency fund is sizable, say you have kept emergency fund more than 9 month, than keep a portion in ultra short fund as well. Maybe Sreekanth will better advise

  • Hi Sreekanth,
    I am a regular visitor of your blog and I have posted a query regarding MFs some time back and got a very prompt and apt response. I went ahead with your suggestion and invested in MFs.
    Thanks for all the good work you have been doing.

    I have a question regarding the short term funds/liquid funds.

    Currently I am investing in an RD (10K pm) which offers me 7.9% interest rate. The sole purpose of this RD is to prepay a part of my home loan with the accumulated amount(50K-60K) every 6 months.
    Can I expect similar interest rate if go for short term funds/liquid funds?

    What would be wise to keep investing in RD or should I go for a short term fund/liquid fund?
    If your suggestion is to go for short term fund/liquid fund, Please suggest one which would suit my need.

    Best Regards
    Radhika

    • Dear Radhika,
      Thank you for following my Blog 🙂
      Kindly let me know if your other high priority financial goals have been taken care of? (For example : Allocation of savings to Retirement planning)??

  • Hi Sreekanth

    I want to invest Rs. 60000 in first week of September as my FD is getting mature in some Debt fund for 1 year.

    Can you please suggest which Debt Category should I opt ? Will it be safer than FD as per current market scenario?

    Also, suggest some good funds in the suggested category?

  • HI,

    I have around 5 to 6 lakhs cash in savings account. I want to do STP. How do I invest them in better way. Request you to kindly let me know on which funds I should invest From liquid perspective/short term/debit to equity. My age is 42. Conservative.

  • Hi Sreekanth,

    As usual, no doubts on getting very very good useful info from your blog and website for any investment options.
    Thank you so much for creating and providing such valuable info.

    I need your suggestion and inputs on liquid funds (best ones) to invest (i.e 1-3 lacks) for very short term (i.e < 6 months) instead keeping in saving account. Please suggest.

    Thanks & Regards
    Chandra

  • Hi Srikanth,

    My age is 37. I’m very new to mutual funds. Based upon my online research, I’ve started investing in the following SIP schemes since 2 months.

    1. SBI Magnum Balanced Fund – Regular – Growth – 1000/month
    2. SBI Blue Chip Fund – Regular – Growth – 1000/month
    3. ICICI Prudential focused blue chip equity – 2000/month
    4. Birla Sun Life frontline equity – 1000/month
    5. Franklin Templeton Prima Plus – Direct – Growth – 1000/month
    6. Franklin Templeton India Opportunities – Direct – Growth – 1000/month

    My main goal is to invest in good and low risk mutual funds for long term; 10 years.

    Other investments:
    PPF – 5000 / month
    Sukanya Samrudhi Scheme – 12500/month

    I’ve 75L term insurance as well.

    1. Could you please review my port folio and give your valuable suggestions?
    2. Even after all the above investments, I’m still left with 50,000 rupees in my savings account every month? Could you please suggest where can I invest this amount?

    Thanks,
    Ravi A

  • Dear Sreekant

    Presently Iam buying and selling MFs thru ICICI direct.com d-mat n trading account.
    Once I register in MF Unity online platform and buy units on line, is it possible to transfer data of all my existing portfolio from icici direct to MFUtility platform and discontinue icici d-mat acct.

    Regards
    Hariharan

  • Dear Mr Reddy, I am a Over Seas Citizen of India and have just sold a small joint property. My share was around 12lacs.

    Can you please tell me how do I invest in order to avoid capital gains tax and tax on interest thereof.

    Yours sincerely

    Roy Choudhury

  • Sir
    Will it affect Bond market and Bond Funds if Government fails to fight against Inflation. Can Bond Market affect if Govt cannot select proper person as NewRBI Governor?

  • Hi Sir
    I’m 30 yrs old. Please review my portfolio and suggest me if any…
    1-LIC Life insurance cum retired plan : 50K per year, need to pay next 20 yrs
    2- Bank FD: 300000
    3- SIP Details as below(Monthly Basis)

    1)Franklin India Tax Shield – Growth(ELSS)
    Rs.2000/-

    2)Axis Long term equity fund – Growth(ELSS)
    Rs.2000/-

    3)BNP Paribas long term equity fund – Growth(ELSS)
    Rs.1000/-

    4)Franklin India Prima fund – Growth(Mid cap & Small cap)
    Rs.1000/-

    5)Franklin India Smaller companies fund – Growth(Mid cap & Small cap)
    Rs.1000/-

    6) ICICI Prudential value discovery fund – Growth(Diversified Equity)
    Rs. 1000/-

    7) HDFC Balanced Fund – Growth(Balanced Fund)
    Rs. 2000/-

    LumpSum…
    1. Franklin India Tax shield(ELSS invested to save tax for last FY 15-16)
    Rs.50000/-

    2. Axis long term equity fund(ELSS invested to save tax for last FY 15-16)
    Rs.50000/-

    My Goal is to have 50lakhs liquidity cash after 10 years. Is it good and safe decision to continue above mentioned SIPs for next 10 years?. Please suggest me if any changes required in my portfolio and kindly suggest me to buy some other safe mutual funds(low risk long term debt fund, gold fund etc) to balance risk if I would have taken high risk by opting above mentioned funds.

    Thank you With Great anticipation!

  • Hi Sreekanth,

    I am beginner in mutual fund investment.

    I have done below investment.

    HDFC equity growth fund Rs 1500/-
    Franklin India Prima Plus Rs 1000/-
    Birla Frontline equity fund Rs 3000/-
    Axis long term equity fund ELSS 1000/-
    Franklin tax shield ELSS 1000/-
    Birla sun life tax relief 96 ELSS 1000
    HDFC balanced fund 1500
    Mirae emerging blue chip fund 1500/-

    I just need your advise on my above investments whether it is right or Do I need to make some amendment?

  • Hello
    I had posted 2 weeks back also but I dont know why my comment is not posted here.
    Anyways, My father has retirement corpus of around 50 Lakhs. Above that, he is getting monthly pension of around 30k. So, no problem in monthly expenses here.
    Kindly suggest how shall we go about investing these 50 Lakhs..? Shall we go for 100% in debt funds (If yes, pls suggest funds.).
    Waiting for suggestion
    Thanks

      • Hello

        Thanks. Now my comment appears on that post. But where is your reply dear ..?

        I am not able to see any reply under my comment on that post. Please recheck.

        Thanks a lot.

      • Dear Sreekant,

        Greetings. I really appreciate your dedicated and unassuming service, particularly for half knowledged persons like me.

        I’m 63 retired from a public sector company.
        Don’t have pension, only income being my savings and PF amount. (Sorry to say I lost a big chunk of my savings approx 15 lacs during 1908 market crash.). Anyway, my present investment as below.

        15 lacs in Sr citizen savings scheme ( submitting 15H)
        5 lacs in MIS of post offices ( non taxable)
        RS 23000 Rent from my flat in an apartment
        Besides above my investment in mutual fund as below:

        Debt fund

        LT Inc opp. 25000
        Birla dynamic bond 225000
        BNP PAr flexi debt. 250000
        HDFC High Into dynm 300000
        Idfc dynm bond 275000
        HDFC ST opp debt. 100000
        Idfc SS Income ST debt. 250000
        LT ST opp debt. 300000
        SBI ST (ultra ST). 45000

        Balanced Fund

        HDFC balanced. 125000
        Icici pru balanced. 20000
        Tata balanced. 100000

        Tax savings

        Axis LT equity. 175000
        Franklin India tax shield 75000

        MIP

        Icici pru MIP-25 50000
        Birla SL MIP II wealth-25. 150000

        Equity

        Birla SL frontline 50000
        Birla SL top 100. 40000
        Can robeco emerging eq. 75000
        Franklin prima plus 50000
        HDFC midcap opp. 25000
        Icici pru focussed blue chip 12500
        Icici pru value discovery. 10000
        Kotak select focus. 25000
        SBI blue chip. 50000
        Franklin build India. 50000
        LT business cycle. 125000

        My calculation says I don’t come under tax bracket. Is it correct. If so are my investment reasonable.
        There is no time frame or any particular goal except for emergencies or a trip abroad
        My average monthly expenses 35000
        (including health insurance 50000 for me and spouse paying annually with present age slab)

        My next query is am I meeting the requirement considering present and expected inflation rate 10 years next.

        Are there any over lap in MF funds held by me

        I save approx 15000 pm. can you suggest any SIP in equity or debt fund to combat inflation and to meet any emergency major expenses and of course to add more comfort in old age.

        What are the exit clause and STCG LTCG involved in my debt fund which I am holding

        Regards
        Srinivasan Hariharan

    • I WANT TO INVEST IN SHORT DEBT FUND LIKEWISE RECURRING DEPOSIT IN BANK MATURING AFTER ONE YEAR.hOW SHALL i PROCCED.EXPECCTING YOUR GUIDANCE.SEND REPLY ALSO IN EMAIL

  • Hi,

    Presently i am investing Rs. 1000 monthly in ELSS scheme in Axis Long Term Equity SIP Plan so I already have KYC.

    1. Now I want to invest lump-sum Rs. 50,ooo in debt fund to get good and low risk returns but i am not sure which fund should i choose i.e. liquid/ultra short/short term to get better returns.

    2. What is the lock-in period for all these funds so that if any urgency in between, i can withdraw partial or full amount OR in other case if i have some extra amount, i can add that amount also.

    3. I want to invest online to avoid paper works so please tell how can i invest online using BOB Debit card or BOB Internet Banking.

    4. Which is better from Direct Growth or Dividend reinvestment scheme to save taxes as i am in 10% tax bracket.

      • Hi Again, Thanks for the response.

        1. Time Frame is not defined. I have some extra money which i want to invest to make profit (best possible) rather than putting that into savings account.

        2. Earlier i discussed with customer care of Axis, HDFC MF to invest online through BOB Debit Card or Netbanking facility but they told that online investment is possible only through ICICI or HDFC Credit Card so please guide me on this.

  • Hi, I want to invest approx 10 lacs in MF which is 100% safe and gives better returns than FD. My investment Horizon is 1 year as after that I have to use this money to pay for buying a new house. Current interest rates are approx 7.4-7.5% for 1 year and the interest is taxable. Hence after tax it is effectively 5.25% only.

    I understand that Debt / Liquid MF with Dividend option can give better returns and the Dividend is taxfree ?

    What should be done ?

    • Dear vineet,
      Kindly note that investments in MF schemes are subject to various risks and they are not 100% safe.
      If you want safe returns and investment horizon is around 1 year, kindly stick to FDs.
      In case if you would like to take extra risk, you may consider ‘Short term debt funds’.

  • Hi Srikanth,
    I am 40, presently investing Rs.2000 each in the following 5 mutual funds for last 1 year.
    Though I have been investing (monthly SIP) in those funds for last one year, there is no +ve return.
    So, I am thinking of changing some of these funds. Can you please tell me which are not good in this list?
    Please suggest if I should change my portfolio.

    These are for the purpose of my retirement corpus required after 15 years.
    My risk appetite is medium.

    BIRLA SUN LIFE TOP 100 FUND – GROWTH
    Canara Robeco Emerging Equities Regular Growth
    Franklin India Smaller Companies Fund GROWTH
    L AND T INDIA PRUDENCE FUND – GROWTH
    L and T India Value Fund – Growth

    Thanks a lot!

  • Hi Sreekanth,
    I want to invest 1 lac for one year. As per moneycontrol kotak income opportunity fund is no one in ranking and return is around 11% in last one year.
    Is it a good fund. If yes, then why not shortlisted this.

    • Dear Amit,
      I have written this article sometime back, so based on the returns generated at that point of time + other factors, I have shortlisted these funds. But does not mean that other funds are bad. If you believe that Kotak fund meets your investment objective kindly go ahead and invest in it. But do note that past returns are not guaranteed in future.

  • Hi

    Thanks for an informative article.

    Please advise me upon my selection of funds. My investment horizon is more than 3 years. I am a little risk averse investor and prefer my capital to be protected in most scenario.
    I have selected nearly 3 funds in each category as follows:

    Large Cap

    1. BSL Fronline
    2. Kotak Select Focus
    3. SBI Bluchip

    Diversified

    1 Icici Value Discovery
    2. Franklin High Growth COmpanies

    Balanced Funds:

    1. Hdfc Balanced
    2 L& T India Prudence
    3. Icici Prudential Balanced Advantage ( This I have selected because it is somewhere between a balanced fund and debt fund. Is there a better substitue )

    Debt FUnds:

    1. Icici Pru Long Term
    2. Tata Dynamic Bond
    3 Hdfc Dynamic Bond

    Is my selection alright or do Ineed to revise. Please give your valuable feedback

  • Hi Srikanth

    Thanks for valuable info. Can you please suggest best options for monthly income.

    1) FD (Banks / NBFCs / Corporates)
    2) FMPs
    3) Post office MIP or
    4) Debt funds.

    Please advise best option for regular income. i would like to put fixed amount of 2-3 lacs in any of the above options and reinvest the monthly interest in Mutual fund equity schemes.

    Thanks
    Venu

      • Dear Srikanth, Thanks for your response. The reason behind this is to create Passive income.I want to invest the interest income in SIP or SEP mode in stocks or mutual funds. I do not want to invest lumpsum into the market. Is this approach correct ? Thanks . Venu

  • I am starting investment in MF for the first time and I have decided to invest 7000 per month following funds (for 5+ years. Please advise me if it’s good portfolio or not.

    ICICI Prudential Focused Blue Chip Equity Fund – Growth – Rs. 2000
    Mirae Asset Emerging BlueChip Fund – Regular Growth – Rs. 1500
    Axis Long Term Equity Fund – Growth – Rs. 2000
    Birla Sun Life Dynamic Bond Fund – Retail Plan – Growth – Rs. 1500

    Thank you.

  • For an investment horizon of 3 yrs in debt – Would like to invest lump sum of 1 L – 1.5 L.
    In todays scenario – Would you suggest – Reliance MIP or SBI gilt or Tata dynamic bond .

    Thanks
    JJ

  • Hi Sreekanth,

    Your website and articles are really very helpful & I really appreciate efforts you put to provide detailed and unbiased information to investor.

    My questions is, I want to invest about 50K for 6 months, which fund would you suggest? It is a holiday money which I want to put aside.

    Thank you.

  • Hi Sree,
    I want to do a lumpsum investment of around 1 Lakh which I can invest upto 25 years and would be required for my daughter’s marriage(she’s 2 years old now).
    What would be the wise investment? I don’t need tax benefit.
    My investments:
    Lumpsum of 9 lakhs in SBI magnum midcap fund direct growth
    SIP of 6000 in Reliance tax saver.
    Thanks in advance

  • Are debt mutual fund still a better option than FDs post interest rate cuts? I have almost 20 lakh sitting in FDs or in saving account that I would need after one year. What would be ur suggestion ie. Just debt fund or equity MFs also? Appreciate your advice here.

    • Dear Amit,
      Debt funds especially short-term debt funds can relatively perform better than FDs in the next few quarters, considering the downward trend in interest rate. Also, note that TDS in FDs is mandatory even if you do not withdraw the FDs.
      Equity funds are certainly a NO if your investment horizon is around 12 months.
      As you need money after one year, I believe that safety of capital should be given more importance than returns.

      • Dear Sreekant,

        Thanks for your reply. Appreciate if you can advise me how I should go about putting money in different asset class under DEBT category and name of the fund also. I have done some research, based on info available online and arrived on the below:
        (I) Money market ( 20%)
        (II) Corporate Bond short tem ( 25%)
        (III) Corporate Bond medium term ( 25%)
        (IV) FDs ( 30%)

        I would highly appreciate if you can suggest instruments in each of class based on the latest data. I have seen your previous blogs on the best instrument/funds but appreciate your suggestion in the current scenario post rate cuts by RBI.

        Regards,
        Amit

        • Dear Amit,
          Personally I may not worry too much to allocate monies in different types of debt funds for a short term goal.
          You may consider investing in Short term debt fund like HDFC Short-term fund.

      • Dear sreekant, i m looking for long term sip plans i.e > 5 years to meet future requirements. I can invest 6k monthly and my current portfolio is

        -icici pru value discovery growth 2k
        – uti mid cap growth 2k
        -sbi blue chip growth 1k
        I can further invest 1000 , please suggest. Regards.

  • Hi Sreekant,

    Thanks for such an informative blog.

    I started investing in mutual funds last year. All the plans in which I started a SIP are Direct- Growth. My portfolio looks as below.

    Tax saver ELSS:
    Axis long term: 2500
    Reliance tax saver: 2500
    Birla Sunlife 96 plan: 2500

    Large Cap:
    Sbi blue chip: 2000

    Small & Mid cap:
    Birla Sunlife MNC: 2000
    Sbi magnum: 2000
    Franklin india opp: 1500

    This makes it an investment of 15k a month. I am 27 years old female. I don’t have any specific future plans for now. Please advise :
    1. if I need to make any modifications in the above break up.

    2.Also, I have some liquid savings, which short term fund will you advice (1 year). I can invest upto 2 lakhs in it. Should it be one fund or two?

    3. I ensure to put some money in PPF, would you advise to continue doing it?

    4. I am also planning to get a term insurance, do you think I need one? I have a LIC for 10 years and I am in the 6th year now & pay 25k per year with SA 5,25,000.

    Your guidance will be much appreciated.

    Kindest regards.

    • Dear Ksam,

      ELSS : Kindly check overlap among all these three funds. Read : MF portfolio overlap analysis tools.

      I think Franklin Opp fund is a multi cap fund and not a mid/small cap fund. What is the fund name of SBI in mid-cap category?
      2 – Read:
      Best Debt Funds 2016.
      List of Best Investment options.
      3 – Fine.
      4 – What plan in LIC? (kindly provide plan name, commencement date, tenure of policies). Do you have dependents and/or financial commitments?

      • Dear Sreekanth,

        Thanks for your reply.

        ELSS: Are you please able to suggest the changes I need to make, as it I would be able to make them in the new financial year.

        The fund I have from Franklin is India Smaller Companies Fund (Sorry for not providing exact details) which I am not wrong is Small/Mid cap fund.

        Debt funds – I did read about them on your blog, want to know if I
        – should invest in multiple funds or a single one
        – Would you recommend Ultra short term funds/ Short term Debt MFs or any other

        PPF – If I invest some amount in this, I can reduce my ELSS tax saving funds. Would you advice any additional fund to make my portfolio better.

        LIC- I have Jeevan Saral (It was taken by my father for me)
        Commencement – 2011.
        Tenure – 10 years.

        I have no dependents, I want to secure my future and have enough savings even if I stop working due to family commitments (if I need to).

        Kindest regards.

        • Dear Ksam,
          As suggested, kindly check the overlap among the ELSS funds. All three funds are good individually.
          Franklin Smaller cos fund is a good one.
          If your investment horizon is around 1 year, you may pick one or two short-term Debt Funds.
          Considering your age, you may invest more in your existing MFs and can reduce your allocation towards PPF for next 5 to 10 years or so.
          LIC Plan – You may make it PAID-UP and suggest you to buy a Personal Accident Insurance plan & also Health insurance policy.
          Kindly read:
          How to get rid off unwanted life insurance policy?
          Best Personal Accident Insurance policy.
          Best portals to compare health insurance plans.

          • Dear Sreekanth,

            1.Thanks for the advice. I checked the overlap it’s about 22 to 23% in 2 cases. Is this considered high for me to reconsider the funds.

            2. I read about Jeevan Saral surrender plan; it says “100% of the Maturity Sum Assured, if 5 or more years’ premiums have been paid.” should I go for this or convert into paid up.

            3. Thanks for your advice on short term funds and health & personal accident insurance. I do have a health insurance covered by my employer.

            4. What funds can I add in my MF portfolio ( large cap, balanced, diversified or anything else you would suggest). What is the break up you would advice for a correct mix of funds.

            Kindest regards.

  • Hi Sreekanth,

    Very informative article. I wanted to pursue an Independent CFP course since I’m passionate about financial planning in an ethical manner without any commission bias. Let me know if there is any way that I can reach out to you and talk about this in greater detail.

    Thanks and regards.

  • Hi Sree,

    I am planning to take a premature retirement from my current job which is quite high salary job and want to start on my own. I have almost Rs. 3 crores at my disposal to invest so that my recurrent expenditure can be met.

    My new venture would certainly take 2-3 years for creating any surplus income for drawls.

    Please advise me investment strategy based on

    1) Targeted post tax returns on investment @ 8-9%
    2) Regular disbursal of returns , may be once a year
    3) FD class safety of investment

    Thanks and regards // Arun

  • Hi Sreekanth,
    Very nice article. I have some lump sum amount with me and I would like to invest in mutual fund through SIP. My time horizon is for 6 years. The problem is, first I thought to invest my whole amount in some MIP scheme and through STP I will do SIP. But then I came to know STP can be done in same fund class. Now I would like to know what can be the alternate way to park my whole amount for 6 years and periodically withdrawal can be done for SIP. Please suggest.

  • Dear Srikanth,

    I am a beginner for both Mutual fund and Equity fund.i am a retired person and i want to put my money through SIP in Debt mutual fund since Fixed deposit interest rate are going down presently. kindly advice me the best 3 funds in this category for a span of 20r 3 yrs.
    i take note of all your dept funds in this article. i appreciate your nice presentation and explanation. pl. advice me to startnow or after 29th the budget day.
    thanks & regards

  • Dear srikanth,
    I would like to invest in debt fund for a time period of 3-5years. Suggest me good fund based on current market situation.
    Shall I go with tata dynamic bond fund or hdfc high interest fund. Is the investment strategy of the both fund same? Or there any other funds better than these? Kindly advice.

      • Dear Sree,
        Am not expecting a regular income from it. I want it to appreciate. Also my risk appetite is moderate. Based on the situation the time horizon may increase beyond 5years also. So should still I need to go for MIP for dynamic bond fund?

        • Dear Udayakumar,
          Only if you opt for MIP-Dividend option, you may get periodic income.
          If you opt for ‘growth’ option, you may get better returns than say FD/Debt fund over a period of say 3 years, because an aggressive MIP like
          Birla Sunlife MIP II Wealth 25 plan invests around 20% of its fund corpus in equities and the remaining in fixed income securities.

          In case if you would like to stick to equity oriented funds, you may consider a balanced fund.
          Read : Top balanced funds.

  • Hi,

    I would like to invest in balanced and in ELSS fund. Please suggest.

    I have already invested in the following funds by SIP:

    1) IDFC Premier equity fund (G) – Rs 2500 PM.
    2) Franklin India smaller companies (G) – Rs 2000 PM
    3) Reliance Retirement Fund – Wealth creation (G) – 1000 PM
    4) NPS – Tier 1 – Rs 1000 PM.

    Can I continue to invest in the above funds or can I switchover to other funds. Please guide.

  • Hi Srikanth,

    Nice one. I am glad to know about this website. I have below MF SIPs now, can you please advise if this is good to continue. I am looking to invest for around for five years.
    HDFC Mid Cap Opportunities Fund G
    FT Indian Blue Chi Fund G
    SBI Magnum Equity Fund G
    SBI Pharma Fund G
    ICICI Value Discovery Fund G
    Canara Robeco Emerging Equities fund G

    I am investing 1000 per month in the above funds.

  • please suggest necessary changes in my portfolio.

    i have invested in Franklin India Prima plus-Rs.2000
    Franklin India high cos fund-Rs.1000
    HDFC Balanced fund-Rs.1000
    Earlier i was also investing in Franklin India blue-chip fund, but there has been 64% portfolio overlap with Franklin India Prima fund, thereafter i cancelled SIP in Bluechip

    • my investment horizon is 7-9 years, what should be minimum investment horizon for equity based investments.

      have invested in Franklin India Prima plus-Rs.2000
      Franklin India high cos fund-Rs.1000
      HDFC Balanced fund-Rs.1000
      Earlier i was also investing in Franklin India blue-chip fund, but there has been 64% portfolio overlap with Franklin India Prima fund, thereafter i cancelled SIP in Bluechip

  • Hi Sreekanth,

    Nice article! How would you suggest investing in debt funds on SIP’s? Thanks.

  • first of all nice article
    i am a housewife me and my husband want to make money by investimng in debt funds but we dont know is it safer or not
    secondly which debt fund to choose and for what period
    pls help us

    • Dear bindu..The time-frame has to be decided by you, else you may let me know more details about you financial goal(s), accordingly we can identify the right investment options.
      Investments in Debt funds are safer than equity funds. However the returns are not guaranteed.

  • Hi Sreekanth,
    Very nice and informative article. Thanks for sharing all the gyan!!.
    One imp question though.
    1.Why do you say that Liquid funds for eg. are for investing funds 1-3 months and Ultra short term are for funds investment btw 3-9 months and so on ?. Do you mean that if i invest in these, i must redeem my investment in the specified period to earn the indicative returns and if i invest for longer period, the returns will be reduced ?
    2. If i have excess funds in my savings bank account earning 4% and instead i would like to put it in some debt fund, can i not choose one of the funds you suggested and just let it be parked there. I dont know when i may need the funds and also i dont want to be churning the fund every few months. Would that mean i would get less than the indicative returns for that type of debt fund and i must necessarily churn depending on how long i want to stay invested ?

    Pls do comment. Thanks

    • Dear Tej,
      Be it be a Debt fund or equity fund, one needs to invest them based on goals.
      So I my goal is 3 years from now, I prefer to invest in MIP fund (aggressive) and try to remain invested in one fund only. The same is applicable for debt funds too.
      It is advisable not to invest in Debt funds for really longer period.
      It is better to remain invested in a chosen debt fund considering the tax implications.

      • Hi Srikanth
        I have about 50 lakes surplus for investment currently saving account cum fixed account where I get something like 3.5 lakes as interest. I have another 15 lakes in senior citizen deposit scheme that hives me 1.5 lakes as interest. I get a pension of About 70000 which will be increased to about 90000 so financially I have no compulsion to save. Kids are well settled and sure financially independent. I will be paying 20000 income tax. I like paying taxes to government, every year I pay more so that I have mental peace. I just want to keep 15 lakh as emergency funds. The question is should I invest to save tax, will it be morally correct if yes where should I invest and the modalities. I want to have least complicated life. Kindly suggest one at the most three funds. I can bear losses without any regrett. Remember I don’t have any financial targets. I live a simple life. I can’t even spend my pension fully. I have started GPF last year to which I add 150000 each year. I was thinking opening a GPF account for my wife and putting 150000 into that also. And putting 1500000 into senior citizen account of my wife but the interest accrued will be credited into my salary. Could you please suggest something attractive which is simpler to execute.

  • Thanks Sreekanth for another nice and informative article. You may also want to include about Arbitrage Funds in this post as returns/risks are equivalent to that of debt funds.

    • Dear Tejas,
      I agree that Arbitrage funds can also be considered on par with debt funds. But I have intentionally not included them here as majority of the investors may not understand the way they function. Investors who understand how they work and the associated risks with them can surely invest in arbitrage funds.

    • >