So I have been an investor in Mutual Funds since a few years now. 70% of my investment portfolio is invested in Equity. While rest are PPFs and some gold.
I wanted to park some money for emergency and also some in debt instruments, for diversification. But as it turns out debt funds are more confusing than equity.
There are a lot of types of funds in equity depending on the risk and target investment horizon. So I am making this thread to share our knowledge towards debt funds for anyone who is interested enough to invest in them.
Disclaimer though: I am not a SEBI registered advisor and anything we discuss in this thread should not be considered an investment advice.
So below are some of my learning (or notes) from few videos (which I will link below).
These notes are from below 3 videos:
1. *www.youtube.com/watch?v=LyePk679Crw
2. *www.youtube.com/watch?v=TDU8lve33KI
3. *www.youtube.com/watch?v=QzBcS_56V_w
I wanted to park some money for emergency and also some in debt instruments, for diversification. But as it turns out debt funds are more confusing than equity.
There are a lot of types of funds in equity depending on the risk and target investment horizon. So I am making this thread to share our knowledge towards debt funds for anyone who is interested enough to invest in them.
Disclaimer though: I am not a SEBI registered advisor and anything we discuss in this thread should not be considered an investment advice.
So below are some of my learning (or notes) from few videos (which I will link below).
A bond = Loan by company from us (investors)
Debt Mutual Funds = portfolio of different bonds
There are certain risks in debt funds:
- Credit Risk: It can be checked from ratings given by Crisil.
- Liquidity Risk: When the amount can't be redeemed due to liquidity issues
- Interest Rate risk: It's mostly in Guilt funds, most volatile
These are major types of debt funds based on duration:
- Liquid Funds: Lowest risk, replacement of bank, for slightly more returns than savings rate (to invest for upto 1 year)
- Ultra short term (For 3-6 months)
- Short term (For 6-12 months)
- Medium term (For 3-5 years)
- Long term (For 5+ years)
Now types of funds:
- Gilt Funds: Negligible credit risk (since invest in govnment security), so can invest for longer duration
- Credit Risk funds: Bit riskly, since invest in few low credit rating funds
- Banking & PSU funds: Credit security is good. One can invest for 1-3 year
- Dynamic Bond funds: Alternate b/w short and long term fund, so good fund
- Equity Market, Banking & PSU Fund, Gilt funds (is good for 3+ years)
To find best funds:
- Check Fun Ratings: Check from 3 portals: Crisil, Value research, Morningstar
- AUM: In equity, High AUM generaly means Low Returns, while in Debt funds, High AUM means it can give High Returns.
- Past Performance
- Risk Matrix
- Modified Duration (should be low)
- Fund Manager (shouldn't change. If fund manager changed, then it's as good as new fund)
These notes are from below 3 videos:
1. *www.youtube.com/watch?v=LyePk679Crw
2. *www.youtube.com/watch?v=TDU8lve33KI
3. *www.youtube.com/watch?v=QzBcS_56V_w