Debt mutual funds have the ability to give you superior returns then bank deposits, as they tend to park some money into equities. Some debt funds have predominantly invested heavily into debt, while a portion of money has been earmarked to equity thus giving returns up to 20 per cent in the last one year.
SBI Magnum Gilt Fund - Long Term Plan
This fund has almost all of its money in government securities. In the last one year the fund has given a return of 20 per cent. The 5 year returns from the fund has been close to 10 per cent, which could easily have beaten bank deposits, since mutual fund schemes are also tax efficient.
One word of caution when investing in the fund is that it would be over stretched to assume that we would get another 20 per cent returns in the next one year, like we have in the past year. The last one year has been pretty extraordinary for all mutual funds schemes.
L&T Gilt Fund - Investment Plan
Like SBI Magnum Gilt Fund, L&T Gilt Fund has also been a good performer among debt mutual funds in the country. The scheme has given a return of almost 18 per cent in the last one year. Bulk of the assets are deployed in government owned securities, thus making the fund a safe investment. The 5 year returns are close to 10.10 per cent, making the returns pretty attractive. The net asset value of the quarterly dividend payment plan is Rs 13.40.
Birla Sun Life Gilt Plus - PF Plan
You can invest in the Birla Sun Life Gilt Plus with a minimum investment of Rs 1000. The fund has given a return of almost 20 per cent in the last one year, while the three year returns has been close to 12 per cent. The net asset value of the dividend quarterly plan is Rs 10.74.
|Name of Fund||Latest NAV||1 Year Returns||3 Year Returns||Amount Required|
|SBI Magnum Gilt Fund - Long Term Plan||Rs 12.87 (dividend quarterly)||21.57%||12.67%||Rs 5000|
|L&T Gilt Fund - Investment Plan||Rs 13.40 (quarterly)||18.40%||13.65%||Rs 10,000|
|Birla Sun Life Gilt Plus - PF Plan||Rs 10.70 (quarterly)||20.87%||11.46%||Rs 5000|
Check daily NAV of mutual funds here
Debt mutual funds, particularly, those that have exposure to government securities can be considered as very safe. The one thing that we would like to advise investors is that returns in the last one year have been extraordinary. Please do not expect similar returns going forward. One can expect returns in the range of 8-10 per cent in the next one year.
The above mentioned are largely Gilt Funds, which do not have other forms of debt and which have purely invested in government securities.