In this post, I discuss the basic ideas necessary for a beginner interested in debt mutual funds to get started. I shall keep it short, sticking to the essentials. Many of you may know that I have a separate category for debt mutual funds. My Book, You Can Be Rich Too For Goal-Based Investing has a…

An ultra short term mutual fund is a type of fixed income or debt mutual fund that invests in short-term bonds issued by banks, PSUs, corporate, cash and govt bonds. In this post, I discuss how and when to select ultra short term (UST) funds. First, wish you all a happy new. Second, Amazon has…

An interval income mutual fund or more generally, interval funds is a lesser known class of mutual funds that are open for subscription and redemption only at specified time intervals. A discussion about their main features and how to use them. An open-ended mutual fund allows purchase and redemptions on all business days. A closed-ended…

A mutual fund Fixed Maturity Plan (FMP) is a closed-ended debt mutual fund. A discussion on how and when to choose FMPs. A closed-ended mutual fund is one in which no purchase or redemption can be made after the new fund offer (NFO) period. The scheme has a fixed maturity date and unitholder can redeem…

One advice about investing in debt mutual funds that never made any kind of sense to me is: “pick a debt mutual fund whose maturity profile matches your investment horizon”. You will find this in many articles online and here is why I think it is plain wrong. Say you wanted to invest in a…

I would like to discuss the dangers of investing in debt mutual funds without understanding risks in the next few posts. There are two problems associated with putting all eggs in one basket and we only talk about one – the basket coming apart. The second and equally important problem is the search for the…

Bond yields have been dropping rapidly since the demonetization announcement. As a result, the NAV of long-term gilt mutual funds has been on the increase. At a time when many investors want to benefit from this move, Mr Srinivasan Sundarajan, in this third guest post, cautions to look before you leap. +=+=+=+ About 10 days ago,…

A financial instrument that lets you defer paying taxes until maturity is way superior to one where you need to report and pay tax on the income generated each year of investment. That is the single most important reason why debt mutual funds are superior to fixed deposits.  This is an illustration of the power of…

In the last ten months, we have had three instances of credit rating downgrades in mutual fund portfolios. We had discussed these in some detail and also suggested ways to choose debt mutual funds with no credit risk and low volatility. In this post, let us look at how these funds have recovered and what we…

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…

Franklin Templeton AMC hailed for its ‘strong research’ in selecting corporate bonds has come in for a lot of criticism due the downgrade (Feb 15th 2016) and subsequent default (March 9th 2016) of Jindal Steel bonds. A discussion on how to minimize risk associated with debt mutual fund investments. First, a look at the Jindal…

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…