Bank deposits at best can fetch you interest rates of around 7-8 per cent. They are taxed and are in fact less tax efficient than debt funds. Here are 8 of the best debt funds that can give you better returns than bank deposits.
Birla Sun Life Treasury Optimizer Fund
Birla Sun Life Treasury Optimizer Fund has given an average return in excess of 10 per cent each year for the last three years. To be precise 10.36 per cent. This is excellent by any stretch of imagination.
The fund has exposure to quality debt instruments that are highly rated. The growth option presently has a NAV of Rs 191.85.
Franklin India Ultra Short Bond Fund
With three year average returns of around 9.87 per cent, this has to best debt plan around. Returns from debt funds post tax are much better than banks, because you get indexation benefits.
The 1-year returns from Franklin India Ultra Short Bond Fund is 9.56 per cent, which is again super. The company has heavy exposure to debentures from the private sector.
Baroda Pioneer Treasury Advantage Fund
This fund has given returns of 9.06 per cent for the last 1 year and an average of 9.20 per cent each year, for the last three years.
This beats returns from banks for the last 1 year.
It mostly has safe investments in its portfolio with a heavy exposure to the Corporation Bank CDs.
DHFL Pramerica Ultra Short Term
This is another fund that has given returns that are much better returns over the slightly longer term of 3 years.
The fund has generated a return of 9.39 per cent,which is pretty decent. The fund has the biggest exposure to the ICICI Bank CDs.
Taurus Ultra Short Term Bond Fund
This is another short term bond fund like DHFL Pramerica Ultra Short Term.
Returns have been pretty decent above the 9 per cent mark on an average per year for the last 3 years.
The growth plan has a NAV of Rs 1857.1803.
L&T Gilt Fund
L&T Gilt Fund has given a return of 9.58 per cent in the last 1 year. The average returns in the last three years per year is 9.68 per cent.
The net asset value under the growth plan of the scheme is Rs 37.9519.
SBI Magnum Gilt Fund
SBI Gilt Fund has a 4-star rating from Value Research Online. The fund has generated a return of 8.23 per cent in the last 1 year and the three year returns is 8.89 per cent per annum.
The NAV of the fund is Rs 32.61.
IDFC Government Securities Fund
IDFC Government Securities Fund has a 1-year returns of 8.59, while the 3 year returns is 8.24 per cent. Bulk of the holdings of the fund is in government securities.