Debt & Balanced Funds
While Equity mutual funds are meant for high risk taking investors with long term investment horizon, Debt and Balanced funds are of low/moderate risk.
Debt Mutual Funds are low risk funds which mainly invest in a mix of fixed income securities such as Government Bonds, Corporate Bonds but not in stock markets.
They are classified on the basis of time horizon as mentioned below.
|
Fund Type |
Instruments |
Duration |
Return (expected) |
|
Liquid Funds |
Treasury Bills |
1-90 Days |
7%-9% |
|
Ultra Short Term Funds |
T Bills, Commercial Papers |
3m-6m |
7%-9% |
|
Short Term Funds |
Commercial Papers |
6m-1 yr |
7.5%-9.5% |
|
Medium Term Funds |
Corporate Bonds, Govt Bonds |
1yr-3yr |
8%-10% |
|
Long Term Funds |
Corporate Bonds, Govt Bonds |
>3yr |
9%-11% |
Apart from superior returns as compared to fixed deposits, there are significant tax benefits of investing into Debt mutual funds which we will discuss next.
Balanced funds as the name suggests invest in a mix of Equity and Debt but predominantly would invest more than 65% in stocks to generate superior returns and tax savings.
These are meant for moderate risk investors who are looking for superior returns but also don’t want to invest fully into stocks.
Now that you know various funds available based on your risk appetite, let us deep dive to further know how we can save tax by investing into mutual funds.
Download the app now by clicking on Google Play link below. Learn everything about mutual funds on Fintra app.
