Saturday, March 20, 2010

Debt Mutual Funds - Low Risky

Debt Mutual fund is designed especially for the low risk investor who aims at capital preservation with decent returns on investment. Debt Funds invest in long-term borrowing of the government or corporate issuers at fixed rates of interest. These funds earn their returns from the interest payments that they receive from bonds / gilts and the fluctuations in the market price of their holdings.

You can have limited exposure to these funds to add a balance to your portfolio. An ideal investment portfolio would have around 10-15% exposure to these instruments. Debt funds give you Capital Appreciation and Regular Income

Capital Appreciation: Debt funds buy either listed or unlisted debt instruments at a certain price and sell them. The difference between the cost and sale price accounts for the appreciation or depreciation in the funds value. A debt instruments market price depends on the interest rates of its underlying assets and also any up or downward movement in the credit ratings of its holdings. Let us say our debt fund owns a security that yields a 10% interest. If the market interest rates fall, new instruments that hit the market would reflect the changed interest rates and offer lower returns. This would result in an increase in our funds price as the higher yield would raise our instruments value. As a result the NAV of our fund would increase which provides us with the capital appreciation

Regular Income: Similar to the interest that banks offer us on our deposits, debt funds also earn a regular interest from the fixed income securities they are invested in. This income gets added to the debt fund on a regular basis. This income would be shared with us, thereby providing us with regular income

The tax advantage: Debt funds have to be looked beyond the rate offered on the investment. Dividends from debt mutual funds are taxed at a rate lower than highest marginal tax rate. The long term capital gains can also be paid after indexation benefit. Investors holding debt funds over one year time frame are taxed only for capital gain at a lower rate compared with bank deposits which are taxed at marginal rate of taxation. Long term capital gains, no TDS on redemption proceeds for resident investors and dividends being tax-free in the investor’s hands subject to distribution taxes.

The list of Debt Mutual Funds available currently for purchase

Category Scheme Name Launch Date Min. Inv.
Debt - Floating Rate Templeton FRIF - LTP (G) 18-Feb-02 10,000
Debt - Floating Rate Templeton FRIF - STP (G) 18-Feb-02 100,000
Debt - Floating Rate HDFC Float Rate Inc-LTP (G) 8-Jan-03 5,000
Debt - Floating Rate HDFC Float Rate Inc-STP RP(G) 8-Jan-03 100,000
Debt - Floating Rate ICICI Pru Floating RP - B (G) 28-Mar-03 1,000,000
Debt - Floating Rate DSP-BR Floating Rate Fund (G) 12-May-03 5,000
Debt - Floating Rate Birla SL FRF - LTP - RP (G) 4-Jun-03 5,000
Debt - Floating Rate Birla SL FRF - STP - RP (G) 4-Jun-03 5,000
Debt - Floating Rate JM Floater Fund - STP (G) 25-Jun-03 5,000
Debt - Floating Rate JM Floater - LTP - RP (G) 25-Jun-03 5,000
Debt - Floating Rate Kotak Floater STP (G) 7-Jul-03 5,000
Debt - Floating Rate UTI Floating Rate -STP-RP (G) 29-Aug-03 5,000
Debt - Floating Rate Tata Floating Rate - STP (G) 22-Dec-03 10,000
Debt - Floating Rate Tata Floating Rate - LTP (G) 22-Dec-03 10,000
Debt - Floating Rate LIC MF Floating Rate (G) 29-Mar-04 5,000
Debt - Floating Rate SBI Magnum Income-FRP -STP (G) 14-Jul-04 2,000
Debt - Floating Rate SBI Magnum Income-FRP-LTRP (G) 14-Jul-04 2,000
Debt - Floating Rate ICICI Pru Floating RP - C (G) 30-Jul-04 30,000,000
Debt - Floating Rate ICICI Pru Floating RP - A (G) 30-Jul-04 10,000
Debt - Floating Rate IDFC MMF-Invest. - RP A (G) 30-Jul-04 5,000
Debt - Floating Rate Kotak Floater LTP (G) 6-Aug-04 5,000
Debt - Floating Rate Reliance Floating Rate (G) 27-Aug-04 25,000
Debt - Floating Rate ICICI Pru Floating RP-LTP B(G) 4-Sep-04 1,000,000
Debt - Floating Rate ICICI Pru Floating RP-LTP A(G) 4-Sep-04 15,000
Debt - Floating Rate Principal FRF- FMP RP (G) 6-Sep-04 5,000
Debt - Floating Rate Principal FRF- SMP RP (G) 6-Sep-04 5,000
Debt - Floating Rate JM Floater - LTP- Premium (G) 5-Oct-04 5,000
Debt - Floating Rate HSBC FRF - LTP (RP) (G) 8-Nov-04 10,000
Debt - Floating Rate HSBC FRF - STP (RP) (G) 8-Nov-04 100,000
Debt - Floating Rate Can Robeco Float Rate-STP (G) 22-Feb-05 5,000
Debt - Institutional ICICI Pru STP - Inst. Plan (G) 24-Feb-03 25,000
Debt - Institutional ICICI Pru Income-Ins. Plan (G) 15-Mar-03 25,000
Debt - Institutional IDFC MMF - TP - IP B (G) 3-Apr-03 10,000,000
Debt - Institutional JM Short Term Plan - Inst (G) 4-Apr-03 100,000
Debt - Institutional L & T Freedom Inc STF-IP-G 10-Apr-03 1,000,000
Debt - Institutional Birla SL Saving Fund - IP (G) 16-Apr-03 50,000,000
Debt - Institutional Principal Income STP- Inst (G) 8-May-03 1,000,000
Debt - Institutional Principal Income-Inst Plan (G) 8-May-03 1,000,000
Debt - Institutional Sundaram Bond Saver - IP (G) 18-Aug-03 5,000,000
Debt - Institutional HSBC Income STP- Inst Plan (G) 15-Sep-03 5,000,000
Debt - Institutional SBI Premier Liquid - IP (G) 21-Nov-03 5,000,000
Debt - Institutional IDFC GSec - PF Inst B (G) 17-Mar-04 2,500,000
Debt - Institutional IDFC MMF - TP - SIP C (G) 1-Apr-04 50,000,000
Debt - Institutional DWS Insta Cash- Inst (G) 25-Jun-04 10,000,000
Debt - Institutional IDFC MMF-Invest. - IP B (G) 30-Jul-04 10,000,000
Debt - Institutional Tata FRF- Short Term Inst. (G) 31-Aug-04 10,000,000
Debt - Institutional Fortis Short Term Income -IP (G) 3-Sep-04 10,000,000
Debt - Institutional Principal FRF- FMP -Inst (G) 6-Sep-04 10,000,000
Debt - Institutional Principal FRF- SMP - Inst (G) 6-Sep-04 10,000,000
Debt - Institutional HSBC FRF- LTP (Inst Plan) (G) 8-Nov-04 5,000,000
Debt - Institutional HSBC FRF- STP (Inst Plan) (G) 8-Nov-04 5,000,000
Debt - Institutional Sundaram Flexible Inc -IP (G) 24-Dec-04 10,000,000
Debt - Institutional Sundaram Flexi Inc-STP-IP (G) 24-Dec-04 10,000,000
Debt - Long Term JM Income Fund (G) 12-Dec-94 5,000
Debt - Long Term Birla SL Income Plus -B RP (G) 21-Oct-95 5,000
Debt - Long Term Templeton (I) Income Fund (G) 3-Jan-97 10,000
Debt - Long Term Birla SL Income Fund (G) 3-Mar-97 5,000
Debt - Long Term HDFC High Interest (G) 27-Mar-97 5,000
Debt - Long Term Templeton India IBA (G) 23-Jun-97 10,000
Debt - Long Term Sundaram Bond Saver (G) 18-Dec-97 5,000
Debt - Long Term Reliance Income Fund (G) 31-Dec-97 5,000
Debt - Long Term Escorts Income Plan (G) 18-May-98 1,000
Debt - Long Term UTI Bond Fund (G) 17-Jun-98 1,000
Debt - Long Term ICICI Pru Income (G) 19-Jun-98 5,000
Debt - Long Term SBI Magnum Income Fund (G) 30-Nov-98 2,000
Debt - Long Term Kotak Gilt Invt - Regular (G) 5-Jan-99 5,000
Debt - Long Term LIC MF Bond Fund (G) 9-May-99 5,000
Debt - Long Term Templeton (I) Govt Sec -CP (G) 21-Jun-99 10,000
Debt - Long Term ICICI Pru Gilt (IP) (G) 9-Aug-99 5,000
Debt - Long Term ICICI Pru Gilt (TP) (G) 9-Aug-99 25,000
Debt - Long Term UTI G-Sec Investment (G) 4-Sep-99 1,000
Debt - Long Term Tata Gilt Sec Fund (G) 6-Sep-99 1,000
Debt - Long Term DSP-BR Govt. Sec. (G) 23-Sep-99 5,000
Debt - Long Term JM G-Sec Fund (RP) (G) 29-Sep-99 5,000
Debt - Long Term Birla SL Gilt Plus-Regular (G) 11-Oct-99 5,000
Debt - Long Term Birla SL Gilt Plus-PF Plan (G) 11-Oct-99 5,000
Debt - Long Term Birla Sun Life GSec - LTF (G) 28-Oct-99 25,000
Debt - Long Term LIC MF Govt. Sec. Fund (G) 29-Nov-99 10,000
Debt - Long Term Can Robeco Gilt PGS (G) 14-Jan-00 10,000
Debt - Long Term L & T Gilt - Inv Plan (G) 29-Mar-00 10,000
Debt - Long Term IDFC SSIF - RP A (G) 7-Jul-00 5,000
Debt - Long Term HDFC Income Fund (G) 11-Sep-00 5,000
Debt - Long Term Reliance Medium Term Fund (G) 18-Sep-00 5,000
Debt - Long Term IDFC SSIF - STP Plan A (G) 13-Dec-00 5,000
Debt - Long Term SBI Magnum Gilt - LTP (G) 1-Jan-01 25,000
Debt - Long Term Escorts Gilt Fund (G) 21-Mar-01 1,000
Debt - Long Term HDFC Gilt Fund - STP (G) 25-Jul-01 5,000
Debt - Long Term HDFC Gilt Fund- LTP (G) 25-Jul-01 5,000
Debt - Long Term Taurus Short Term Income (G) 18-Aug-01 5,000
Debt - Long Term Taurus Gilt Fund (G) 18-Aug-01 5,000
Debt - Long Term Principal GSec- Inv. Plan (G) 23-Aug-01 5,000
Debt - Long Term Templeton (I) G-Sec - LTP (G) 24-Dec-01 10,000
Debt - Long Term UTI Gilt Advantage - LTP (G) 28-Jan-02 5,000
Debt - Long Term Templeton (I) ST Income (G) 31-Jan-02 5,000
Debt - Long Term Sahara Gilt Fund (G) 6-Feb-02 5,000
Debt - Long Term Baroda Pioneer Gilt Fund (G) 14-Feb-02 2,000
Debt - Long Term ICICI Pru Long Term Plan-RP (G) 26-Mar-02 5,000
Debt - Long Term ICICI Pru Flexi Inc -Prem (G) 21-Sep-02 5,000
Debt - Long Term HSBC Income Fund - IP (G) 3-Dec-02 10,000
Debt - Long Term Franklin (I) International 20-Dec-02 100,000
Debt - Long Term DWS Short Maturity - RP (G) 21-Jan-03 5,000
Debt - Long Term DWS Premier Bond - RP (G) 21-Jan-03 5,000
Debt - Long Term Birla SL Short Term Opp-RP (G) 9-May-03 25,000
Debt - Long Term Tata Gilt High Fund (G) 10-Jul-03 10,000
Debt - Long Term UTI-Gilt Adv -LTP PF(PDAR) (G) 26-Sep-03 5,000
Debt - Long Term UTI Gilt Advantage-LTP PF(G) 26-Sep-03 5,000
Debt - Long Term Tata Gilt RP (28/02/13) (G) 29-Sep-03 50,000
Debt - Long Term Tata Gilt RP (28/02/25) (G) 29-Sep-03 50,000
Debt - Long Term Tata Gilt RP (28/02/11) (G) 29-Sep-03 50,000
Debt - Long Term Tata Gilt RP (28/02/10) (G) 29-Sep-03 50,000
Debt - Long Term SBI Magnum Income Plus-SP (G) 22-Oct-03 25,000
Debt - Long Term Kotak Gilt-Inv PF & Trust (G) 11-Nov-03 5,000
Debt - Long Term ICICI Pru Gilt Inv Plan - PF 14-Nov-03 25,000
Debt - Long Term SBI Magnum Gilt LTP - PF (G) 28-Nov-03 25,000
Debt - Long Term SBI Magnum Gilt LTP-PF 1Yr (G) 28-Nov-03 25,000
Debt - Long Term SBI Magnum Gilt LTP-PF 2Yr (G) 28-Nov-03 25,000
Debt - Long Term SBI Magnum Gilt LTP-PF 3Yr (G) 28-Nov-03 25,000
Debt - Long Term LIC MF Govt. Sec Fund-PF (G) 24-Dec-03 25,000
Debt - Long Term SBI Dynamic Bond Fund (G) 13-Jan-04 5,000
Debt - Long Term ICICI Pru Gilt (TP) PF 31-Jan-04 25,000
Debt - Long Term IDFC GSec - PF- RP A (G) 17-Mar-04 5,000
Debt - Long Term ING Gilt-PF Dynamic (G) 31-Mar-04 30,000
Debt - Long Term Templeton (I) Govt Sec- PF (G) 7-May-04 25,000
Debt - Long Term Birla SL Dynamic Bond -RP (G) 24-Sep-04 5,000
Debt - Short Term L & T Triple Ace (G) 31-Mar-97 2,000
Debt - Short Term DSP-BR Bond Fund - Retail (G) 7-Apr-97 5,000
Debt - Short Term Tata Income Fund (App.) 26-Apr-97 5,000
Debt - Short Term L & T Freedom Inc -STF -G 27-Nov-97 3,000
Debt - Short Term Kotak Gilt Savings Plan (G) 5-Jan-99 5,000
Debt - Short Term ING Income Fund (G) 7-May-99 5,000
Debt - Short Term DSP-BR Treasury Bill Fund (G) 23-Sep-99 5,000
Debt - Short Term Birla SL Gilt Plus-Liquid (G) 11-Oct-99 5,000
Debt - Short Term Birla SL G-Sec - STF RP (G) 28-Oct-99 25,000
Debt - Short Term Kotak Bond (Regular) (G) 29-Nov-99 500,000
Debt - Short Term Kotak Bond (Deposit) (G) 29-Nov-99 5,000
Debt - Short Term Principal Income Fund (G) 25-Oct-00 5,000
Debt - Short Term SBI Magnum Gilt - STP (G) 1-Jan-01 25,000
Debt - Short Term ICICI Pru Short Term Plan (G) 19-Oct-01 5,000
Debt - Short Term Birla SL Saving Fund - RP (G) 22-Nov-01 5,000
Debt - Short Term HDFC High Interest - STP (G) 6-Feb-02 5,000
Debt - Short Term Sahara Income Fund (G) 6-Feb-02 3,000
Debt - Short Term Templeton (I) Govt Sec -TP (G) 11-Feb-02 5,000
Debt - Short Term Baroda Pioneer Income (G) 14-Feb-02 2,000
Debt - Short Term IDFC GSec -Inv Plan -RP A (G) 21-Feb-02 5,000
Debt - Short Term IDFC GSec - STP -RP A (G) 21-Feb-02 5,000
Debt - Short Term HDFC Short Term Plan (G) 28-Feb-02 5,000
Debt - Short Term Birla SL Short Term - RP (G) 18-Apr-02 5,000
Debt - Short Term Kotak Bond-Short Term Plan (G) 22-Apr-02 5,000
Debt - Short Term Principal Income Fund-STP (G) 25-Apr-02 5,000
Debt - Short Term JM Short Term Plan (G) 24-Jun-02 5,000
Debt - Short Term IDFC Dynamic Bond -RP A (G) 26-Jun-02 5,000
Debt - Short Term Tata Short Term Bond Fund (G) 8-Aug-02 10,000
Debt - Short Term ING Short Term Income (G) 16-Aug-02 5,000
Debt - Short Term DSP-BR Short Term Fund (G) 4-Sep-02 5,000
Debt - Short Term Can Robeco Income (G) 7-Sep-02 5,000
Debt - Short Term Tata Income Plus - Plan B (G) 21-Nov-02 100,000
Debt - Short Term Tata Income Plus - Plan A (G) 21-Nov-02 5,000
Debt - Short Term HSBC Income Fund - STP (G) 3-Dec-02 100,000
Debt - Short Term Reliance Short Term Fund (G) 17-Dec-02 50,000
Debt - Short Term Tata Gilt Sec - SMF (G) 10-Jan-03 10,000
Debt - Short Term DWS Insta Cash Plan (G) 21-Jan-03 100,000
Debt - Short Term IDFC MMF - TP - RP A (G) 19-Feb-03 5,000
Debt - Short Term LIC MF Savings Plus Fund (G) 4-Jun-03 5,000
Debt - Short Term UTI Short Term Income - RP (G) 24-Jun-03 30,000
Debt - Short Term IDFC SSIF -MTP - RP A (G) 27-Jun-03 5,000
Debt - Short Term Tata Dynamic Bond- Plan A(G) 2-Sep-03 5,000
Debt - Short Term Tata Dynamic Bond- Plan B(G) 2-Sep-03 100,000
Debt - Short Term Can Robeco Treasury Adv-RP (G) 12-Sep-03 5,000
Debt - Short Term DWS Ultra STF - RP (G) 20-Oct-03 5,000
Debt - Short Term HSBC Gilt Fund - STP (G) 2-Dec-03 5,000
Debt - Short Term UTI G-Sec Fund - STP (G) 9-Dec-03 1,000
Debt - Short Term SBI Magnum NRI - STB Plan (G) 13-Jan-04 50,000
Debt - Short Term Fortis Flexi Debt Fund-RP (G) 3-Sep-04 5,000
Debt - Short Term Fortis Short Term Income -RP (G) 3-Sep-04 100,000
Debt - Short Term Reliance NRI Income Fund (G) 1-Nov-04 50,000
Debt - Short Term Kotak Flexi Debt (G) 30-Nov-04 5,000
Debt - Short Term Sundaram Flexi Inc-STP-RP (G) 24-Dec-04 5,000
Debt - Short Term Sundaram Flexible Inc -RP (G) 24-Dec-04 5,000

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