Franklin India Savings Plus Fund can be classified as an ultra-short term debt mutual fund that invests predominantly in floating rate bonds (to minimise interest rate sensitivity) of reasonably good credit quality, making it a reasonable candidate for first-time debt mutual fund investors to consider. In this post, I look at the main characteristics of the fund. This post is not a recommendation to invest in this fund. It is a recommendation to learn more about this fund.
Many Investors, especially senior citizens, who purchased long term gilts funds (or their cousins, dynamic bond funds) after seeing recent double-digit returns, are puzzled and even worried about why these funds are falling since the last three months. In this post, I discuss the reasons behind this and how to make sense of debt fund NAV movements.
Before we begin, my book with PV Subramanyam, You Can Be Rich Too is available at 50 discount (Rs. 198) for short periods of time this month as it was among the top 25 bestsellers in the last 3 months. Grab it now!
Dear Reader, This is a pdf collection of 26 posts on debt mutual funds written over the past 4 years. I enjoyed learning and writing about every bit of this fascinating space in finance – tradable fixed income. Debt mutual funds are not exactly easy to understand, but I believe they are not hard to understand at least the basics and use them intelligently to reduce the tax burden, especially after retirement. So even if you do not need a debt fund one, it is highly likely that you would need one after retirement. So now would be a good time to start understanding them.
Why blame Value Research For awarding Taurus Liquid Fund that is in trouble for continuing to buy a near-junk bond (Ballarpur Industries), five stars (four stars when commissions are removed)? That is like blaming someone because they could not predict a market crash!
Before we go any further, it is important to recognise that many in the advisor community use star ratings. So there is no need to get holier than thou and start blaming "direct investors" here.
The incredulous 7% fall in the NAV of Taurus Liquid Fund due to a credit rating downgrade has many worried. Can investors avoid such funds? Is this a "small amc" problem? Is this a small aum problem? I thought liquid funds were safe! Just a sample of how many investors feel. In this post, I discuss these issues and how to minimise risk associated with liquid funds.
First, let us get the obvious out of the way. No mutual fund is safe. Risk cannot be avoided (without enhancing other types of risk) and can only be minimised.