[srsrini]

Originally Posted by roadjourno

I have large amount invested in HDFC Short Term Debt Fund. Is it time to move it out from there ? Please advise

As Smartcat said, the exposure is less than 1%. The fund seems to have already marked this down. I did not look at the full details, the NAV went down by 4 paise on Jan 21. It has now gone up by 3 paise - regular appreciation in 4 days.

[fine69]

Originally Posted by smartcat

However, its always a good idea to put 50% in equity funds and 50% in debt funds.

Mutual Funds always excited me so I took the plunge in Feb 2018 in a fund called the Kotak Select Focus Fund. It was a large-cap fund and I wanted to start safe. In April 2018 it was renamed to Kotak Standard Multicap Fund and moved to a different category I guess (multicap?)

Now if I look at the 1-yr return as well as the category returns, the fund doesn't seem so bad. I don't want to change the fund right now because even if it performed bad in the last 1 year, its still managed to be above the category.



The dilemma that I have is that I wish to invest another 10k per month and since I only have an equity fund in my portfolio, it only makes sense to go for a debt fund.

So is the answer as simple as investing in a debt fund or are there different type of funds (like liquid funds) that I should be considering. What really are my options?

[SmartCat]

Originally Posted by fine69

So is the answer as simple as investing in a debt fund or are there different type of funds (like liquid funds) that I should be considering. What really are my options?

Just like how a bank offers up to 1 year, up to 3 years and up to 5 years FD schemes with increasing interest rates, a debt fund investor too has similar options. But with debt funds, it is not as simple as fixed deposits since NAV can see temporary falls. If you are new to debt funds, just stick to the following category of funds -

- Overnight funds
- Liquid funds
- Money market funds.

You should get anywhere between 6% to 8% per annum.

[govigov]

I already have an FranklinTempleton ELSS, now planning to start with a debt liquid scheme from the same fund house.

This one -

https://www.franklintempletonindia.c...t-account-4629

https://www.valueresearchonline.com/...chemecode=2869

I guess this is a good one, unless others have a difference of opinion. Planning to start on 1st week of Feb.

Just to clarify, in this scheme, if the amount if only withdrawn post 3 years, then the investor is eligible for indexation benefits, is this correct? Please correct me if I am wrong.

Also, is it recommended to do a SIP into such a fund? If so, how is the indexation benefits calculated, is it for the total amount invested that is more than 3 years old, and for the rest, do you have to treat it as additional income?

Sorry for all the questions, I am new to debt funds.

[hothatchaway]

Originally Posted by govigov

I already have an FranklinTempleton ELSS, now planning to start with a debt liquid scheme from the same fund house.

This one -

https://www.franklintempletonindia.c...t-account-4629

https://www.valueresearchonline.com/...chemecode=2869

I guess this is a good one, unless others have a difference of opinion. Planning to start on 1st week of Feb.

Do you have a specific goal in mind which investing in a liquid fund will help achieve? Liquid funds can be considered if you want to park some surplus money for contingency/deployment in equity periodically/taxation benefits if you fall in the 30% slab.

Originally Posted by govigov

Just to clarify, in this scheme, if the amount if only withdrawn post 3 years, then the investor is eligible for indexation benefits, is this correct? Please correct me if I am wrong.

Redemption from debt funds after 3 years of holding is subject to STCG tax with indexation @ 20% or a flat 10% whichever is lower. If you redeem before 3 years it will be added to your other income and taxed basis the slab you fall in

Originally Posted by govigov

Also, is it recommended to do a SIP into such a fund? If so, how is the indexation benefits calculated, is it for the total amount invested that is more than 3 years old, and for the rest, do you have to treat it as additional income?

A so called SIP is done to ensure investing in a disciplined manner and to achieve rupee cost averaging. I do not think the latter applies to debt funds with securities with an average maturity of less than a year. The NAV graph of liquid/ultra short debt is a steady one generally, unlike that of equity funds for eg, so nothing to gain from staggering your investments into a liquid fund. To answer your question on indexation irrespective of fund category, in order to calculate tax liability, the duration of each SIP instalment, from date of investment to completion of 1y/3y will have to be taken into consideration

Do consider the fact that debt funds, liquid or otherwise, are not risk free. If you are saving for a short term goal and cannot afford to risk capital, consider FDs accounting for taxes of course. Do also go through the scheme information document to get a sense of what the investment objectives of a fund are and evaluate if you can live with the perceived risks. Everything considered, I do not think debt mutual funds offer any great advantage over traditional instruments like FDs

[sgiitk]

With the current deflationary pressure, returns from MFs have also become very poor. This is totally accepted. In fact for the first time my Investment in a Portfolio Management Scheme of a major fund management house has shown negative returns for the year. This was a small & midcap based scheme.

One has to take these knocks in ones investment career.

[govigov]

Originally Posted by hothatchaway

Do you have a specific goal in mind which investing in a liquid fund will help achieve?



Redemption from debt funds after 3 years of holding is subject to STCG tax with indexation @ 20% or a flat 10% whichever is lower. If you redeem before 3 years it will be added to your other income and taxed basis the slab you fall in



so nothing to gain from staggering your investments into a liquid fund.

To answer your question on indexation irrespective of fund category, in order to calculate tax liability, the duration of each SIP instalment, from date of investment to completion of 1y/3y will have to be taken into consideration

Thank you, HHA, I just need a place to park some excess funds. I do not know when I would need this amount. It is just lying idle. Also, with the car loan paid off, I am thinking I would just divert the loan amount into this fund. So this would be like a monthly thing.

I am not quite sure I understand this flat 10% whichever is the lower thing, what condition makes you eligible for 10%? I thought it was always taxed at 20% flat on the growth of the capital amount after indexation. Also, how is the completion of 1y period important?

[hothatchaway]

Originally Posted by govigov

Thank you

I am not quite sure I understand this flat 10% whichever is the lower thing, what condition makes you eligible for 10%? I thought it was always taxed at 20% flat on the growth of the capital amount after indexation. Also, how is the completion of 1y period important?

Hi, the 1y period applies to equity funds which is the minimum holding period to qualify for LTCG. Appending a link which should explain the treatment
https://www.bankbazaar.com/tax/capital-gains-tax.html

[srsrini]

Originally Posted by hothatchaway

Do you have a specific goal in mind which investing in a liquid fund will help achieve? Liquid funds can be considered if you want to park some surplus money for contingency/deployment in equity periodically/taxation benefits if you fall in the 30% slab.

...


A so called SIP is done to ensure investing in a disciplined manner and to achieve rupee cost averaging. I do not think the latter applies to debt funds with securities with an average maturity of less than a year. The NAV graph of liquid/ultra short debt is a steady one generally, unlike that of equity funds for eg, so nothing to gain from staggering your investments into a liquid fund. ...
Do consider the fact that debt funds, liquid or otherwise, are not risk free. ...

Getting onto a soapbox.


This linking of SIP and equity is one of the worst myths spread by the industry. SIP has many benefits - only one of them is rupee cost averaging. The biggest benefit in my mind is the automation, and removal of decisions every investment period. And frankly, almost all salaried folks have to invest monthly. Since they are reasonably sure when they would get the income, SIP is quite useful to schedule the investments. Both these benefits are perfectly applicable regardless of the fund that you invest in.

Rupee cost averaging is best suggested if someone has a large lumpsum (say more than 20% of their current equity exposure) to invest. It can work either way - in a steady bull market you would lose out by staggering investments!


Also, PPF, EPF, VPF, plus a liquid fund to handle reallocation needs is almost the ideal debt part of a portfolio.

[murugaveln]

DHFL Pramerica debt mutual funds seem to have large exposure to DHFL. Its Ultra Short Term fund has 34% exposure to DHFL. Also considering the recent news about DHFL, will it be safe to stay invested in this fund or is it better to move to other funds?

[DudeWithaFiat]

Newbie alert!

I have some funds lying around in my Savings account and before it is too long and too late, I have decided to invest it in MFs across different fund houses. The following plan is what I have in mind.

1) 5k SIP long term: Axis Bluechip Fund - Already signed up 2 days back, waiting for the process to complete.

2) 5k SIP long term: In a mid-cap fund - yet to decide which fund, open to suggestions.

3) 5k SIP long term: In a small-cap fund - yet to decide the fund, open to suggestions.

4) 1 Lakh lumpsum : In a short-term debt fund.

I can spare another 2 or 3 Lakhs for MF which I can invest as Lumpsum. The only other investment that I have now is the annual investment of 1 Lakh in Sukanya Samriddhi Yojana, a 10k monthly Chit fund with KSFE (a Govt. of Kerala run Chit company - very reliable) and a 5 Lakhs Fixed deposit.

Questions are:

1) Does it look like a good plan? My risk appetite is medium.

2) I do not see any of the SBI Mutual funds in the list of top funds suggested in various websites. Are SBI MFs generally unpopular?

[dhruvdangi]

Is there any passive mutual fund which is based on past performance of the stocks?
For example, a collection of all stocks present in the top 100 list and having a CAGR of more than X%.
This obviously is not a foolproof strategy but seems to be better than investing in Nifty 50, Nifty Next 50.
If we calculate CAGR performance (of last 10 years) of the top 100 stocks and invest in the top 20, wouldn't that be a better approach than NIFTY 50/ NEXT 50?

[bullrun87]

Originally Posted by DudeWithaFiat

Newbie alert!

I have some funds lying around in my Savings account and before it is too long and too late, I have decided to invest it in MFs across different fund houses. The following plan is what I have in mind.

1) 5k SIP long term: Axis Bluechip Fund - Already signed up 2 days back, waiting for the process to complete.

2) 5k SIP long term: In a mid-cap fund - yet to decide which fund, open to suggestions.

3) 5k SIP long term: In a small-cap fund - yet to decide the fund, open to suggestions.

4) 1 Lakh lumpsum : In a short-term debt fund.

I can spare another 2 or 3 Lakhs for MF which I can invest as Lumpsum. The only other investment that I have now is the annual investment of 1 Lakh in Sukanya Samriddhi Yojana, a 10k monthly Chit fund with KSFE (a Govt. of Kerala run Chit company - very reliable) and a 5 Lakhs Fixed deposit.

Questions are:

1) Does it look like a good plan? My risk appetite is medium.

2) I do not see any of the SBI Mutual funds in the list of top funds suggested in various websites. Are SBI MFs generally unpopular?

For a person with medium risk appetite you are making very risky investments of 2/3rd of your outgo in mid and small cap funds. Moderate risk investors should invest mostly in large cap and multi cap funds. Please remember to start equity SIP's only if you wish to continue for atleast 5-7 years else debt funds are the way to go. You should go with a multicap fund instead of the small cap fund due to your moderate risk outlook. You can choose from mirae asset india equity, ppfas long term or sbi multicap for a multi cap fund. Invesco mid cap, L & t mid cap and kotak emerging equities are good mid cap funds.

Instead of investing lumpsum, you can choose a liquid fund of the fund house you want to invest in and use STP to transfer your lumpsum into an equity scheme in several installments.

There is nothing wrong with SBI amc. they have top quartile funds in several categories. SBI multicap, SBI focussed equity and SBI small cap are some of their top performers. They also have the biggest nifty and sensex ETF by size.

[pradkumar]

Here is a list of mutual fund companies that own Zee Entertainment:

https://www.valueresearchonline.com/....asp?code=4505

Pradeep

[rovingeye]

I'm sitting on cash, waiting for the crash.