How to choose debt mutual funds with no credit risk and low volatility

A method to choose debt mutual funds with no credit rating risk and low volatility  or interest rate risk from a category known as short-term gilt funds – is discussed. This is post is a follow up to  Debt Mutual Fund Investments: Minimizing Risk which referenced the fall in NAV of several Franklin Funds due to…

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Understanding Credit Rating Risk in Debt Mutual Funds

Many debt mutual funds invest in corporate bonds which carry credit risk. It is important for investors to understand how this can affect debt mutual fund returns. Yesterday, rating agencies, CRISIL, ICRA and CARE downgraded short-term and long-term ratings on Jindal Power and Steel bonds. As a result, the NAV of debt funds which held…

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Comparison: Short-term gilt vs. long-term gilt vs. Ultra short-term mutual funds

Here is a comparison between three types of funds (by choosing one in each category): Short-term gilts funds, Long-term gilt funds and ultra short-term gilt funds. In this post, I would like to reiterate a point made earlier about staying away from gilt funds unless we know how to trade in accordance with interest cycle…

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How to Select Debt Mutual Funds Suitable For Your Financial Goals?

Since the time my step-by-step guide to selecting (Equity) mutual funds become popular, I have been receiving requests to publish a similar guide for debt mutual funds. Well begun is half-done. If an investor can confidently select categories suitable for their financial goals, short-listing a set of funds from that category is that much easier….

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Debt Mutual Funds vs. Fixed Deposits: Volatility Simulator

This simple Monte Carlo simulator gives you the probability of a debt fund, with variable annual returns, outperforming a fixed deposit. If you are thinking about investing in a debt mutual fund, but are worried about fluctuating returns (volatility) – especially after the recent crash in bonds, this tool could answer a pertinent question: What…

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Debt Mutual Fund vs. Fixed Deposit Comparator – Version II

There are many articles on the web that talk about the difference in the way debt mutual funds and fixed deposits are taxed. Almost all of them (including the ones by self-proclaimed beacons of financial literacy) talk about post-tax returns typically over 3-5 year periods. To my knowledge there is only one article, written by…

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