This is the archive of all our articles related to debt mutual funds
There seems to be a sudden interest in debt mutual funds. Possibly because everyone is expecting an interest rate cut? Possibly because of propaganda? Regardless of the origin, here are some facts you need to know before buying a debt mutual fund. 1. Debt mutual funds are not an alternative to fixed deposits! A fixed…
Continue reading →A reader says, “When interest rates go high, the value of debt mutual fund investment decreases (although reason and logic are well understood). There is nothing one can do about it. However, if money is in a bank fixed deposit (instead of a mutual debt fund), one can always rebook the FD at a higher…
Continue reading →A reader says, “You discussed money market and arbitrage funds as debt instruments and average maturity values. I could not grasp this concept of average maturity. Google search tells me that avg maturity value of money market funds are like one year. Does this mean I have to withdraw the amount after one year to…
Continue reading →A reader asks, “For the gilt portion of my portfolio for a 10+ year goal, would you recommend passive or active funds?” Let us look at the different options available to an investor. Instead of looking at this as an active vs passive question, let us look at it from the pov of NAV volatility…
Continue reading →A reader wants to know, “Which debt mutual funds are suitable for short-term and long-term goals?” A discussion. A related question is whether debt funds are still relevant as there is no tax advantage compared to fixed deposits. Yes, debt funds are still relevant because they are necessary for rebalancing a portfolio. Also, unlike FDs,…
Continue reading →A reader says, “Given the changes in debt fund indexation benefits, I come across market veterans recommending equity savings and multi-asset funds as alternatives. I have the SBI, Kotak and Parag Parikh conservative hybrid funds in three different portfolios in my family. Would you continue to recommend these conservative hybrid funds for a long term…
Continue reading →Readers often ask, “What debt fund should I add to a long term investment portfolio?” After gains from debt mutual funds became taxable as per slab (applicable to units purchased from 1st April 2023), more readers have sought tax-efficient options. So here is an updated list of debt & hybrid mutual funds suitable for a…
Continue reading →After the debt mutual fund taxation change from 1st April 2023, many readers have asked us if they can use NPS Tier 2 as an alternative—a discussion. We had previously discussed a related idea: Can I use NPS Tier II as a low-cost index fund? All NPS pension fund managers provide portfolio details under “statutory disclosures”…
Continue reading →In this article, SEBI registered fee-only advisor Swapnil Kendhe explains all the things related to debt mutual funds that retail investors should understand if they want to make informed decisions appropriate for their financial goals. About the author: Swapnil Kendhe is a SEBI Registered Investment Advisor and part of my list of fee-only financial planners. You…
Continue reading →A subscriber to our YouTube channel writes, “Do we have any debt fund like benchmark Nifty 50 Index fund for 7-10 years period. I just want to follow only one fund. Of course, the major chunk is EPF, PPF, and ESOP. This is to build slowly in debt space for a future 25% allocation”. “I…
Continue reading →A reader asks, “I have been reading a bit on Target Maturity Funds and wanted to know if these can be used like a recurring deposit. Example: Let’s say I wish to buy a house in 2031. I want to create a substantial amount for the down payment”. “I intend to build the corpus through…
Continue reading →Several readers have asked us how their investment strategy should change due to the change in debt mutual fund taxation rule applicable from 1st April 2023 on fresh purchases. This is our topic coverage with all the details: Debt mutual funds to be taxed as per slab from 1st April 2023! And Will SEBI help investors…
Continue reading →In this article, we explain why investors and AMCs need SEBI’s help in tackling the debt fund taxation rule to come into force from 1st April 2023. Taxation status from 1st April 2023 Funds holding 65% or more of Indian equity or Indian equity ETFs are equity funds (no change in this) Funds holdings less…
Continue reading →In a surprising move, the govt announced several amendments to the finance bill 2023. Among the changes is the change in taxation status for debt mutual funds. Taxation status from 1st April 2023 Funds holding 65% or more of Indian equity or Indian equity ETFs are equity funds (no change in this) Funds holdings less…
Continue reading →There are two types of debt-based passive funds in India. (1) Target Maturity Funds, which would buy and hold an index portfolio and hold it until maturity, thereby reducing interest rate risk at the time of withdrawal. The credit risk in funds is also relatively low as they typically invest in gilts and state development…
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