Past few years have seen portfolios leaning heavily towards equity. However, smart investors are those who understand the risk and diversify their portfolio. Fixed Deposits and Debt Mutual Funds are two most common choices for risk-free investments. Infact Debt Mutual Funds are little easier to deal with (if you have an online demat account, nothing like it) and more transparent.
Easy because you can buy and sell any time without committing for a specific period in beginning and transparent because you know where your money is invested.
Check the load
Yes, it's very important. Some funds don't charge any entry or exit load. So you should go for these funds when you are using debt funds as savings account and might need to buy/redeem frequently.
There are few schemes that offer zero entry load after a specific period (say 6months or 1 year). You can go for them if you won't need your money for that period.
Approximate Returns in different types of debt funds in last one year
Money Market Debt Funds: 8.0 - 8.2 %
Debt - Short Term: 8.5 - 10.5 %
Debt - Long Term: 9.0 - 14.5%
Debt - Floating Rate: 8.7 - 9.3%
However, Debt Short term and long term have shown negative returns also. See Moneycontrol for comparison of returns.
Here are few good funds from each category. However, before investing don't forget to check their past performance, investment style, load structure and your objective. They should be in sync.
Money Market: LIC MF Liquid Fund (G) :: HDFC Cash Mgmt. Fund - SP (G) :: HDFC CMF - Savings Plus RP (G)
Debt - Short Term: Kotak Bond (Regular) (G) :: Reliance Short Term Fund (G) :: Tata Income Fund (App.)
Debt - Long Term: Birla Income Plus - Retail (G) :: Birla Income Fund (G)
Debt - Floating Rate: Kotak Floater LTP (G) :: LIC MF Floating Rate Fund (G) :: HSBC FRF - LTP (RP) (G)
Best Debt Funds
HSBC: Wealth Mis-management
Everyone knows about salesmen lying to sell their products. But I have the best epitome of salesmanship fraud, if I can call it that.
Mr. M from HSBC contacted me to open my Power Vantage Account. I was offered a zero balance account plus a financial planner cum wealth manager, who will research, understand my needs and manage my investments accordingly. And the best part was that I can do everything over phone. A really smart person, Mr. M trapped me in minutes. He paid a couple of visits to my office and finally my account was opened. Soon I was introduced to my relationship cum wealth manager Ms. C.
She quickly went through my documents, existing portfolio etc and suggested me a plan with few SIPs.
I was happy for few days, assuming, I have to just call and my money is taken care of. Well, now here the problems begin...
Problem No. 1: Everything over a phone but sir every time you start or stop a SIP, buy or redeem a mutual fund you have to fill this form. For the first time she came to office to get those forms filled. After that I was asked to visit their branch. And all this process takes 3-4 days (to make a simple MF investment)
Problem No. 2: How to check my portfolio worth? Its coming soon online... It was coming soon... It is coming soon.. and it's going to be coming soon forever, I guess...
Problem No. 3: Ok, there is another way to know your portfolio value. Call up or email Ms. C and she will IMMEDIATELY mail the holding statement. But again a small problem... Ms. C doesn't pick calls, doesn't answer my SMS or email for days... Reminds you of your girl-friend.. isn't it?
Problem No. 4: Ms. C is not reachable for days... And when after trying for days, I get through her phone... She says she has quit HSBC a week back. HSBC DOESN'T finds it necessary to inform me that my RM has changed. At least someone give me the new number...
And I hold the precious PowerVantage Account with free Wealth misManagement
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