What is the benefit of debt mutual fund?
A debt fund invests in fixed-interest generating securities such as corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments. The fundamental reason for investing in debt funds is to earn a steady interest income and capital appreciation.
What is the purpose of a debt fund?
Debt funds aim to generate returns for investors by investing their money in avenues like bonds and other fixed-income securities. This means that these funds buy the bonds and earn interest income on the money. The yields that mutual fund investors receive is based on this.
When a person is investing in debt mutual fund what is the primary objective?
The main reason to invest in debt funds is to earn interest and capital appreciation in form of increase in NAV of your units. Debt mutual funds are for people who, prefer relatively less risky and less volatile asset class as compared to equity do not want to take a lot of risks.
Which is better FD or debt mutual fund?
For instance, if you have invested in an FD at 6% interest, and the inflation rate is 5%, the adjusted return would be merely 1%. Debt funds may deliver relatively higher returns.
Inflation Adaptability of Debt Mutual Funds and FDs.
|Particulars||Debt Funds||Fixed Deposits|
|Holding period||3 years||3 years|
Which debt fund is best?
The table below shows the best-performing debt funds based on the last 5-year returns:
|Mutual fund||5 Yr. Returns||3 Yr. Returns|
|ICICI Prudential Multicap Fund – Dividend||12.87%||17.25%|
|Aditya Birla Sun Life CEF – Global Agri Plan – Growth-Direct Plan||10.35%||11.59%|
|NIPPON INDIA NIVESH LAKSHYA FUND – Direct Plan – Growth||—||11.57%|
Is it good to invest in debt funds?
Debt mutual funds witnessed a net inflow of Rs 63,870 crore in the month of July. … Investors are hence inclined towards debt funds with shorter duration and risk. I believe that this is a good strategy. Investors should not venture into schemes with longer tenure papers in such market conditions.
Is it safe to invest in debt funds now?
Rule: Investments in debt funds are safe because they do not have exposure to volatile assets such as equity shares. Exception: When interest rates are rising, long-term debt funds can give negative returns. … The funds holding bonds of long maturities suffered losses, with the average fund losing 7.26 per cent.
What is the return on debt fund?
Top 10 Debt Mutual Funds
|Fund Name||Category||1Y Returns|
|Nippon India Banking & PSU Debt Fund||Debt||4.8%|
|ICICI Prudential Credit Risk Fund||Debt||7.6%|
|ICICI Prudential Short Term Fund||Debt||5.5%|
|Aditya Birla Sun Life Corporate Bond Fund||Debt||4.9%|
Are debt funds tax free?
As per the norms of the Income Tax Act, 1961, the dividends offered by debt mutual funds are taxable in the hands of investors. … As per the existing norms for taxing dividends offered by debt funds, if you fall under the 20% income tax bracket, you will pay Rs 20 for every Rs 100 received as dividends.