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Debt Funds, unlike equity mutual funds, offer their investors a steady stream of income as well as capital protection. These funds are taken the best option for investors' short-term money requirements.
Savvy investors who fear taking risks in their investment can look towards investing in debt funds, as they are least associated with risk. Also, debt funds are taken as the best alternative to saving bank account and fixed deposits.
Debt funds are typically short-term investments, but investors can go investing for long-term say 5 years or more in debt funds also. However, from the perception of benefits obtained from long-term investment in equity funds, investors are advised, not to plan their long-term investment in debt funds.
There are several AMC’s that have their debt funds launched, running, and managed by experts in the market. Well SBI Mutual Fund has some of India's best-performing debt funds.
These funds have been chosen based on their past performance, AUM, and other factors. Investors who want to invest for the short term or are finding an alternate space for their money kept idle in a savings bank account can consider investing in these debt schemes.
Let us see the details of these SBI debit schemes!
How Do Debt Funds Work?
A debt mutual fund invests the money pooled by investors in fixed-income securities such as government bonds, debentures, corporate bonds, and other money-market instruments. And by investing in such low-risk securities, they aim towards reducing the risk of investing in debt funds.
Key Takeaways:
- Debt funds are short-term investments and less risky than equity mutual funds.
- Debt funds are suitable for savvy or conservative investors, who look towards investing in less risky funds.
- Debt funds are the best alternate for saving bank account and fixed deposits
- SBI Mutual Fund has some of India's best-performing debt funds.
Some Of SBI's performing Debt Funds!
SBI Magnum Medium Duration Fund Direct
A debt scheme that belongs to the Medium Duration Fund category, run and managed by SBI Mutual Fund House. This fund has 90.86% investment in Debt securities out of which, 20.47% is in Government securities and 69.33% of funds invested in very low-risk securities.
Since its debut, it has returned an average of 9.98 percent every year. The fund also has an expense ratio of 0.68%. it offers the option of SIP investment and investors can start investing with a SIP amount of Rs 1000 per month in this fund.
The total value of Asset Under Management of this fund is around Rs 9,412 Crores. The fund's top holdings are in Reserve Bank of India, State Bank of India, Mahindra Rural Housing Finance Ltd., Tata Realty and Infrastructure Ltd., Flometallic India Pvt. Ltd.
The fund is more suitable for investors who want to invest for 1-3 years and are looking for alternatives to bank deposits.
SBI Magnum Income Fund
A debt scheme that belongs to the category of Medium to Long Duration Fund, run and managed by SBI Mutual Fund House. The fund has 77.28% investment in Debt out of which 26.05% in Government securities and 51.23% of funds invested in very low-risk securities.
The last one-year growth returns on the SBI Magnum Income Direct Plan were 5.76 percent. It has had an average yearly return of 8.85% since its inception.
The fund has an expense ratio of 0.8%, and it has its top holdings in Reserve Bank of India, Indian Bank, GOI, Embassy Office Parks REIT, Tata Realty, and Infrastructure Ltd.
The fund is suitable for investors who want to invest money for a longer duration but prefer less risky assets compared to equity funds.
SBI Savings Fund
A debt scheme that belongs to the Money Market Fund category, run and managed by SBI Mutual Fund house. The fund has 113.32% investment in Debt, out of which 43.96% in Government securities, and 69.36% of funds invested in very low-risk securities.
It has an AUM of Rs 22,380.83 crores, and the most recent NAV declared as of 17 July 2021 is 34.591 crores. The fund also has an expense ratio of 0.75%. It has had an average yearly return of 7.25 percent since its inception.
The funds top holding are in GOI, Reserve Bank of India, Axis Bank Ltd., National Bank For Agriculture & Rural Development, and RBL Bank Ltd.
The fund is taken as the best option for investors who want to invest for the very short term and are looking for an alternative to bank accounts/deposits.
Who Should Invest in Debt Funds?
Debt Funds are low-risk associated funds and are featured to yield a good return in a short tenure. However, the returns in debt funds are partly affected by interest rate risks and credit risk. They are also preferred more among other fixed return investments like FD’s (Fixed deposits).
Investors, who have a low-risk profile, and are planning for a short-term investment, then Debt funds are featured for them. Most importantly, always consult a financial planner or advisor, before starting your investments. They will help you select the best mutual fund, for your investments as per your requirement.
For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).