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Top 10 Debt funds

Presented By:Devesh AnandGeetika SrivastavManmeet Kaur

Rajlakshmi Gupta


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Debt Fund

Invest in debt instruments issued not only bygovernment, but also by private companies, banksand financial institutions and other entities such asinfrastructure companies/utilities.

Target low risk and stable income for the investor.

Have higher price fluctuation as compared to moneymarket fundsdue to interest rate fluctuation.

Have a higher risk of default by borrowers ascompared to Gilt

funds. Debt funds can be categorized further based on their

risk profiles.Carry both credit risk and interest rate risks.


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Debt fund in India1. Monthly Income Plans: These are funds that primarily invest in debt instruments, and try to give

you a monthly income in the form of dividends. The income is notguaranteed of course, and they only pay out a dividend if they areprofitable for that time period.

This type of a debt fund is for people who have a big corpus initially, andwould like to generate a monthly income for them with low to moderate

risk.

2. Capital Protection Plans: Capital Protection Plans are debt instrumentsthat guarantee your capital, and then invest a portion of the funds in equityin the hopes of generating excess returns

3. Gilt Funds: Gilt Funds invest in government debt viz. the debt issued byReserve Bank of India on behalf of the government. They also invest insecurities issued by state governments

Gilt funds can be short term gilt funds, or long term gilt funds. The shortterm Gilt Funds are meant for people looking to invest their money forshorter durations of say 3 6 months.


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4. Fixed Maturity Plans (FMPs): Fixed Maturity Plans (FMPs) are quitesimilar to fixed deposits in the sense that these funds are usually closeended, which saves you from interest rate risk. The way the fund works isthat a fund house announces a new fund offer specifying the duration ofthe fund say 18 months or so, and then they collect money from investorswhich is then invested in debt of the same duration.

These funds have become popular because of a sort of a tax

5. Liquid Funds: Liquid Funds are funds that are used by investors forextremely short time durations, and in most cases instead of a savingsaccount. The current savings account interest rate is 3.5% per annum,whereas funds like the SBI Magnum Cash Liquid Float, LIC MF Liquid Fund

and JM High Liquidity Fund have returned 5% since last year. These fundsare not meant to keep money in for longer durations because these samefunds return in the range of 6.5% when you look at their returns for thepast 3 years.


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6. Floating Rate Funds: Floating rate funds are funds that invest in floatingrate debt instruments, and can invest in government and corporatesecurities.

You can have a short term floating rate fund, or a long term floating ratefund. A look at the top floater plans on the Money control page showsthat the 1 year return for the funds that performed in the last year

range in 5.3 to 6.1% area, and the 3 year returns range between 6.9%to 7.9%.

Other long term and short term funds: Outside of the categoriesmentioned above there are debt funds that target long term debt, or shortterm debt, but may not be strictly a liquid fund, or a floating rate fund.


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ICICI Pru Gilt Inv PF-G


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CANARA ROBECO INCOME G


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ICICI GILT PRUDENTIAL G


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ICICI Pru Income Inst-G


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Sahara Income-G


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BNP Paribas Flexi Debt Reg-G


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JM Short Term Reg-G


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Templeton India ST IncomeInst-G


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BSL Dynamic Bond Ret-G


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Escorts Gilt-G


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