Debt Portfolio

POSTED BY Santosh ON January 4, 2012 11:48 am COMMENTS (6)

Hi,
I have been investing in equity, and also have created a contingency fund by using sweepin facility provided by SBI savings plus account. Now I have 20K surplus which I want to invest in debt funds. As the deposit rates will ease in a couple of month, I think long term debt funds will outperform the short term debt funds. Can anyone point to elaborate on the different type of debt funds and they taxation and also how to evaluate a debt fund.
Santosh

6 replies on this article “Debt Portfolio”

  1. Dear Dominic Prakash, If you are asking specifically for Birla Dynamic Bond fund. Yes you may invest in it.

    thanks

    Ashal

  2. Abhishek says:

    Do not go on the name of the Debt Fund, you should know what is the fund manager doing. Consult a Financial advisor for more information about the fund especially on the debt side.

    Regards
    Abhishek

  3. Dominic Prakash says:

    I was told that as the Interest rates are starting to decline, dynamic bond fund are good option at this time. What is your comments on this?

    1. Abhishek says:

      Sometimes the name of the fund may be short term, but it comes out to be a long term fund..

      Regards
      Abhishek

  4. Dear Santosh, Why you are not parking this 20K amount in 10Y Fd of SBI itself @ 9.25% interest rate? Although Tax adjusted returns are poor if you are in 30% tax slab.

    Regarding debt funds, if the interest rates start declining from here onwards, deploy your money based upon your need say after 6 months or after 2-3 years you require this money.

    Thanks

    Ashal

  5. The interest rate change fall will benefit short term funds more than they do long term funds. Push new funds into ST debt plan. However you park money in Debt funds only when you need to reutilize/redeploy somewhere sooner. If not go for LT funds.

    Taxation is the same across DEBT funds – so there is nothing to distinguish there.

    Evaluating a debt fund is easier said than done. Look for Debt funds that have provided consistent returns (versus the respective index I mean) over the last 3-5 years. Then look into their portfolio to ensure they carry AA+ rated securities at least 80%-90%. Then you should be fine.

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