HDFC top 200 is excellent,Ihave sip in it. Also SBI MAGNUM CONTRA FUND is managed well.Funds should be revieved from time to time,as if the change in fund manager.If Prashant Jain moves to a UTI fund then certainly UTI will get more applications.
Those wanting to invest for very long period say 15 years and above can invest in index funds.In index fund the churning of stocks is rare and hence low brokerages,taxes etc.There are index funds from many houses such as HDFC and BENCHMARK MUTUAL FUND. BENCHMARK INDEX FUND IS TRADED ON NSE AS NIFTY BEES.
Joined: 07/Dec/2009
Location: India
Online Status: Offline
Posts: 563
Posted: 16/Dec/2009 at 10:44pm
Since we are talking about MF, i have a doubt. I have some money to be invested somewhere with less risk. (I would avoid stock, equity market for now since it has gone up way too fast). These days FD returns about which is very less. So the only option left is Debt Mutual funds. I was looking at the returns of the debt based MF (for 1 year). I am surprised to see a lot of them returning more than 20%. Some of then even as high as 42%. ( Birla Sun Life Equity Linked FMP Series ). Most of these have very less exposure to equity (less than 5%) or they are purely debt. My doubt is, how are they able to get that much of returns?
pure debt fund offer around 7% return. 20-40% return funds have some money in equity, thus not 100% debt funds (someone can correct me if I am wrong). Equity funds are the funds which have more than 65% exposure to equity, if its 64.9999999% it would be debt fund :P.
Joined: 04/Mar/2009
Location: Australia
Online Status: Offline
Posts: 92
Posted: 16/Dec/2009 at 4:14am
not completely sure that i am correct. but the way i understand that debt can out perform is when the fund invests in long dated instruments when interest rates are high. once interest rates fall, apart from the coupon they are also able to book in capital gains.
About debt funds they also have an advantage of less tax to fixed deposits.Lack of knowledge and awareness keeps debt funds investment away to fixed deposits. Debt funds from high rated AMC are more profitable.
Also debt instruments are popular with HNIs and smart investors.Swiching from equity fund to debt fund is also acommon practice followed by investers as per their convictions.
How debt funds are less taxable ?? It is taxable in your tax slab. Dividends are non-taxable but MF has to pay around 15% tax. Also short term capital gain tax is applicable here too.5 year returns for LTP are in range of 40-50% which would be around 8-9% and I think some lock in also might be there + entry/exit load if any.
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