Money Guru: Which Debt Mutual Funds Should You Include In Your Portfolio? Expert Decodes

Money Guru: Are you looking to invest in debt mutual funds? But confused about what to include in the portfolio? Do you have similar questions like which funds are best in debt? Where to invest in debt? Is it the right time to invest in debt? What is the strategy for investing in debt? Then, the expert Firoz Aziz, Deputy CEO of Anandrathi Wealth Management Pvt Ltd explained this in a chat with Zee Business' Swati Raina in a popular TV Show "Money Guru" in Zee Business.

Best Investment in Debt
There are 14 categories and 367 schemes for investing in debt. 178 funds in short term and 189 funds in the long term. The best investment in debt is investing in fixed-income securities. Securities like government securities, corporate bonds, etc. Also, it is to be noted that debt funds include credit risk and interest rate risk.

Where to invest in debt - Less than 1 year
Fund                                   Net YTM                    MoD
Liquid Fund                           4.83                         0.11
Low-Duration Funds             5.39                         0.64
Money Market Fund              5.36                         0.40
Ultra Short Duration              5.10                         0.39

Where not to invest in debt - Less than 1 year
Fund                                    Net YTM                  MoD
Floating Rate                         5.76                        0.99
Overnight                               4.52                        0.00
Arbitrage                                3.76                        0.00

Best investment in debt - More than 3 years
Fund                                     Net YTM                 MoD
Index Fund                              7.09                       3.79

Where not to invest in debt - More than 3 years
Fund                                     Net YTM                       MoD
Banking & PSU                        5.84                           1.72
Corporate Bond                       6.25                           1.96
Credit Risk                               5.98                           1.69
Dynamic Bond                         5.13                           2.36
Gilt                                           5.78                           3.55
Medium Duration                     6.04                           2.63
Short Duration                         5.92                           1.71
Long Duration                          6.28                           8.76

Tax on Debt Fund
- STCG if redeemed before 3 years
- Tax at slab rate by adding to STCG taxable income
- The profit on selling after 3 years is called LTCG
- 20% tax on LTCG after indexation
- Cess and surcharge will also be applicable on LTCG tax