[ShankarG]

Originally Posted by Simhi

I too received funds from FT schemes yesterday. I had written them off last year. But for now, I have invested them in Gilt funds (safe credit quality) with an investment horizon of 5 to 7 years.

I have diverted my FT redemption proceeds to:
IDFC Government Securities Investment Growth Plan
ICICI Prudential All Seasons Bond Growth Plan

These two funds are the better one's in Debt portfolio. The results too have been decent so far.

[shipnil]

I also received some proceeds from the winding up of FT Ultra Short Bond fund. But the proceeds are less than what they are shown in the statement received. I have received 98% of the amount shown in the statement.

Have other received the exact amount? If not, what could be the reason and how do we get it addressed?

[Simhi]

Originally Posted by shipnil

Have other received the exact amount? If not, what could be the reason and how do we get it addressed?

Your post made me double check the account statement with the funds deposited in the bank. The values matched. You can write to service@franklintempleton.com and clarify your queries.

[creative420]

Originally Posted by creative420

Hi guys. I wanted to ask the informed members if there's a way I can invest for my nephews? Google search says only parents and legal guardian can. Though I am not anointed as their legal guardian, is there a way I could do this? I was thinking I'll ask my brother and my sister to open an account for their kids and then maybe I can take over it.

Or if there's a simpler way of doing this, please let me know. Also, if you can point out which fund-type will be the best bet. They are 10 and 11 years old right now, so I'm just helping them set up a small fund for their future needs.

@SmartCat would love your input on this. What would be the best investment scenario?

[Habanero City]

Originally Posted by ShankarG

I have diverted my FT redemption proceeds to:
IDFC Government Securities Investment Growth Plan
ICICI Prudential All Seasons Bond Growth Plan

These two funds are the better one's in Debt portfolio. The results too have been decent so far.

I have invested in IDFC Government securities investment growth plan in January 2021 and the 1 month return is pathetic especially compared to debt and corporate bond funds.
Wondering if I have made a mistake and how long should I continue with this.

[Simhi]

Originally Posted by Habanero City

I have invested in IDFC Government securities investment growth plan in January 2021 and the 1 month return is pathetic especially compared to debt and corporate bond funds.
Wondering if I have made a mistake and how long should I continue with this.

We are at the bottom of the interest rate cycle and interest rate are likely to inch upwards going forward. In such scenarios, long term debt funds, including gilt funds, will continue to be volatile and even give negative returns. Please invest in these funds only if your investment horizon is 5 to 7 years else better to invest in short duration funds.

[graaja]

Originally Posted by Habanero City

I have invested in IDFC Government securities investment growth plan in January 2021 and the 1 month return is pathetic especially compared to debt and corporate bond funds.
Wondering if I have made a mistake and how long should I continue with this.

Gilt funds have volatility based on interest rates. They give higher returns when interest rates go down and returns are low when interest rates are steady or rising. Gilt funds should be chosen only if your investment horizon is 5 to 7 years. In that horizon, you can expect good returns - 7 to 10% based on past performance. If you are looking to keep the funds for lower duration, then you should consider low duration funds, liquid funds or overnight funds.

[fhdowntheline]

I wanted to hear opinions on aggressive hybrid funds like SBI Equity Hybrid, Mirae Asset Equity Hybrid or CR Equity Hybrid. These are all well rated funds. Just wanted to see if these are ideal to replace a large cap fund. I currently have one too many of those and want to consolidate - replace Mirae Asset Large cap and BNP Paribas Large Cap with one aggressive hybrid fund. I hear from various sources that the market will have multiple periods of volatility but will still grow- so may be worth moving from a couple of large cap funds to one aggressive hybrid ?

[adimicra]

Originally Posted by Simhi

We are at the bottom of the interest rate cycle and interest rate are likely to inch upwards going forward. In such scenarios, long term debt funds, including gilt funds, will continue to be volatile and even give negative returns. Please invest in these funds only if your investment horizon is 5 to 7 years else better to invest in short duration funds.

Originally Posted by graaja

Gilt funds have volatility based on interest rates. They give higher returns when interest rates go down and returns are low when interest rates are steady or rising. Gilt funds should be chosen only if your investment horizon is 5 to 7 years. In that horizon, you can expect good returns - 7 to 10% based on past performance. If you are looking to keep the funds for lower duration, then you should consider low duration funds, liquid funds or overnight funds.

Based on this theory, I actually have only short term bond funds now. Even those are performing miserably over the last 3-6 months. I think many of them have given negative returns in the last month. I have very less knowledge about debt investments. So, any suggestions on where I can put my money for 3 yrs horizon? I want to avoid FD at all costs because of taxation.

Originally Posted by fhdowntheline

I wanted to hear opinions on aggressive hybrid funds like SBI Equity Hybrid, Mirae Asset Equity Hybrid or CR Equity Hybrid. These are all well rated funds. Just wanted to see if these are ideal to replace a large cap fund. I currently have one too many of those and want to consolidate - replace Mirae Asset Large cap and BNP Paribas Large Cap with one aggressive hybrid fund. I hear from various sources that the market will have multiple periods of volatility but will still grow- so may be worth moving from a couple of large cap funds to one aggressive hybrid ?

Based on historical data like rolling returns for 5 years, aggressive hybrid funds have matched or performed better than largecap funds with less volatility or less drawdown. I think using an aggressive hybrid fund as a core MF holding instead of a largecap or index fund makes lot of sense. I am using 2 hybrid funds (one for retirement goal and another for child's education goal) and happy with both - Can rebeco and BNP Paribas. Besides these funds, I use some pure equity funds and direct equity as well.

[ShankarG]

Originally Posted by Habanero City

I have invested in IDFC Government securities investment growth plan in January 2021 and the 1 month return is pathetic especially compared to debt and corporate bond funds.
Wondering if I have made a mistake and how long should I continue with this.

Debt or Gilt funds needs at least 5 years for a moderate return. These two funds primarily aims to secure your capital with nominal returns. If your objective is high return, go for equity based funds.

[graaja]

Originally Posted by adimicra

Based on this theory, I actually have only short term bond funds now. Even those are performing miserably over the last 3-6 months. I think many of them have given negative returns in the last month. I have very less knowledge about debt investments. So, any suggestions on where I can put my money for 3 yrs horizon? I want to avoid FD at all costs because of taxation.

This is what I have learnt from SmartCat and other experts.

Returns from debt funds closely follow interest rate. And over that there will be some short term volatility. You need to choose the duration of the debt fund depending on your investment horizon. For example, if you want to park your money for a few months, then overnight funds is the safe bet. If you have a year or two, then maybe liquid and ultrashort or short term funds. If you have 3 years+, then you could choose bond funds, banking and PSU funds or Gilt funds. When choosing bond funds look at the quality of bonds in the fund and choose.

For 5 to 7 years gilt funds will give you good results and are safest as the chance of defaulting in these bonds are almost zero as these are issued by the Government. Next to Gilt funds, banking and PSU funds are the next safe option as these are issued by banks and PSUs and these institutions usually have Government backing.

So, choose your funds based on your investment horizon.

Personally, I moved all my debt allocation to Gilt, banking and PSU and liquid category based on the investment horizon.

[adimicra]

^^
Thanks for your reply. I have basic understanding of debt funds and I do agree with your comments above.

For >5 years, is Gilt funds the best way to go right now considering the interest rate scenario. Also, I see 2 categories in gilt funds - normal ones and constant 10 yr gilt funds. Which one to choose?

For 2-3 years, what type of funds should I choose? Short term debt funds ?

[SmartCat]

Originally Posted by adimicra

For >5 years, is Gilt funds the best way to go right now considering the interest rate scenario. Also, I see 2 categories in gilt funds - normal ones and constant 10 yr gilt funds. Which one to choose? For 2-3 years, what type of funds should I choose? Short term debt funds ?

There are no clear answers to these questions. Because, from here, if interest rates go up, certain debt funds will do well. And if interest rates go down, another type of debt funds will do well. It's a 50:50 coin toss between the two interest rate scenarios. So why spend our brainpower on this?

So the best way to go about it is to allocate equal capital between:

- Short term (overnight/liquid funds). Liquid funds now are safer than liquid funds in 2020, thanks to some SEBI tweaks. Now liquid funds can invest in govt treasury bills. Now liquid funds can borrow to take care of sudden withdrawals like in March 2020. So we will hopefully not see the March 2020 like crash in liquid funds anymore.
- Medium term (Banking & PSU funds, Bharat Bond ETF). However, I don't bother to invest in this category of funds. I still have a few legacy funds that I'm holding though.
- Long term (constant maturity or regular gilt). Regular gilt is better if you fear that interest rates are going to rise. If the fund manager too feels that way, he will exit 10 year g-sec bonds and buy 30 to 180 days treasury bills. Fund manager can allocate up to 50% of assets to short term bonds.

In other words, regular gilt will be less volatile than constant maturity gilt. But usually, regular gilts will have higher expense ratio because fund house needs to hire a bunch of economists and astrologers who can accurately predict interest rates. Constant maturity gilt funds do not need too much "management". So expense ratio will be lower.

[bullrun87]

Originally Posted by adimicra

^^
Thanks for your reply. I have basic understanding of debt funds and I do agree with your comments above.

For >5 years, is Gilt funds the best way to go right now considering the interest rate scenario. Also, I see 2 categories in gilt funds - normal ones and constant 10 yr gilt funds. Which one to choose?

For 2-3 years, what type of funds should I choose? Short term debt funds ?

I feel the best strategy to follow while investing in debt is to match your investment horizon with the average maturity of the fund you are investing in. If you want to invest for 3 years then choose a fund with 3 years average maturity. So in your case choose a banking+psu, corp bond or short term fund whose average maturity that matches with your horizon.
As far as Gilt funds are concerned, interest rate cycles are notoriously hard to predict and gilt funds are very volatile. As an example the standard deviation of icici corporate bond fund is 1.8 while that of ICICI Gilt is 3.8 implying that the Gilt fund is twice as volatile and you are not compensated for the volatility with returns. On a rolling basis over 10 years both short term and Gilt funds provide about the same returns!
I follow Core and satellite approach in debt investing. The core portfolio consists of short term corporate bond, banking + psu funds (only those with 100% AAA and sovereign bonds) while the satellite portion while consist of gilts. I personally have exited my Gilt investments and moved to shorter duration funds as I believe we are probably at the bottom of the credit cycle. Investing today in duration funds might result in low returns over the next 1-2 years. If you still want to make investments in Gilt funds, you must be stagger them via SIP's .

[SoumenD]

Originally Posted by SoumenD

Any suggestions on L&T emerging business fund? I am invested in it since 2017(stopped SIP 1 year ago). Have always been in red...

Originally Posted by Maibaa

I am in the same situation and my investment started in this fund since 2017. Was in red all these years and now the value is a little over my investment total. I am wondering if it's a good time to exit and reinvest in another fund or in direct equity, or to leave it as it is for some more years since I don't plan to use this capital for a good number of years in future.

Originally Posted by basuk

The situation is the same here! Every time I check, it is always red or just giving a 3-5% ROI..

Did you guys manage to take a call? Did you exit the fund or still holding on?

I am still holding on to it. Returns stand at a respectable 9%(annual return) now which is the highest I have seen since 2017