Best Fixed Income Mutual Funds in India

There are different types of mutual funds available in the market. Each comes with its own set of benefits and purpose. It is always ideal to consult your finance adviser before you zero on any mutual funds.

Today, we shall discuss one of the many mutual funds available in the market, fixed income mutual funds.

What is Fixed Income Mutual Funds?

As the name suggests, these mutual funds come with a fixed rate of returns. They are of the likes of government bonds, investment-grade corporate bonds and high- yield corporate bonds. They major objective of these bonds is to earn money on a regular basis. This is possible with the interest earned through the funds. However, high-yield corporate funds are generally riskier than funds that hold government and investment- grade bonds.

Let us look in to some of the well- known fixed income mutual funds in the market.

DSP BlackRock Bond Fund

An Open Ended income Scheme, seeking to generate an attractive return, consistent with prudent risk, from a portfolio which is substantially constituted of high quality debt securities, predominantly of issuers domiciled in India. As a secondary objective, the Scheme will seek capital appreciation.

Birla Sun Life Income Plus

It is an open ended growth scheme. It is an ideal investment for investors looking for stable income with capital growth ranging from medium to long term tenure. The corpus is invested in debt and money market.

HDFC Income Fund

The major objective of this scheme is to generate income while maintaining a balance of safety, yield and liquidity. The investments come with a low risk on your investments.

DSPBR Government Securities Fund

It is an open ended income scheme, seeking to generate income through investment in Central Government Securities of various maturities.

Franklin India Income Fund

The fund is positioned in the long term bond fund category that focuses investment in high quality fixed income instruments across segments such as G Secs, Corporate Bonds and Money Market instruments.

Four Important Tips to Invest in Debt Funds

Financial Market in India offers different types of instruments to match the risk appetite of different investors. Products in the equity segment are labelled as high-risk entities that reap substantial returns while those in the debt segment are labelled low-risk investment vehicles that guarantee assured returns.

Debt instruments are popular for their assured return rates, which are somewhat lower than their equity counterparts. Since the returns are low, the risk associated with such investments is minimum. As a result they are considered as safe means of investments.

However, debt funds do not offer easy liquidity. So, mutual fund companies provide debt funds to overcome this shortcoming. Unlike debt vehicles, these funds are standardized and the investor does not require extensive financial knowledge to make the purchase decision.

Here are the four simple and easy tips to invest in debt funds:

1>    Plan the tenure

Debt funds invest predominantly in bonds and debentures. All these instruments offer substantial gain over a period of time. As a result, you should invest in debt funds for a long time in order to reap substantial capital appreciation. Furthermore, investment tenure should be more than a year in order to gain double digit returns.

2>    Compare the NAV values

NAV or Net Asset Value plays a crucial role while choosing the right debt fund. NAV value will not depend on the fluctuating market conditions in case of these instruments. However, the value gets affected with the cash flow of the fund. Funds with higher cash flow are often labelled stable as the NAV value does not fluctuate rapidly.

3>    Assess the Credit Quality

Credit rating is a vital parameter considered while purchasing a debt fund. Credit risk analyzing bodies like CRISIL determine the credit rating for all the debt schemes. Schemes that carry lower ratings often compensate their buyers with favorable returns. However, the one with higher ratings are considered the safest.

4>    Determine the Scheme's Portfolio

Debt funds do not necessarily invest in a single instrument. Fund managers choose different instruments in order to get balanced returns as well as to diversify credit risk. Understand the portfolio and determine the credit risk associated with every underlying instrument. This way you can get better insights on how the scheme will perform in the long run.

Top 10 Equity Mutual Fund in India for Ambitious Investor

Mutual funds are often considered relatively safe investment option in comparison to equities. This statement is true as direct investment in stocks involves huge amount of risk. Furthermore, you need substantial amount of working, proven knowledge to convert market fluctuations into monetary equivalents.
To mitigate the equity risk and to tap favorable returns from market fluctuations, Fund managers have launched several schemes. Amongst the various schemes they formulate, equity funds are known to be the top-gainers.

Here are the top 10 equity mutual funds in India that promise double-digit, positive returns to the investors for the year 2014.

1> Birla Sun Life Long Term Advantage Fund
This growth fund is offering a whopping double-digit return of 63.3% for 1 year of investment. Managed by Mahesh Pati, the fund has consistently performed well over the past few years. The standard benchmark for this scheme is S&P BSE 200.

2> Axis Long Term Equity Fund
With an annual return rate of 78.1%, this scheme from the Axis fund house continues to be one of the consistent top-performers. Benchmarked against S&P BSE 200, this diversified scheme invests predominantly in Banking, automotive, and technology sector.

3> BNP Paribas Equity Fund
With an unmatched growth rate of 51.4% for a year, this CNX Nifty benchmarked growth fund continues to lure investors, even today. The portfolio is diversified and returns are equated.

4> Quantum Long-term Equity Fund
Marked against the S&P BSE SENSEX, this growth fund is the best call for long term growth. With portfolio packed with technology and oil/chemical giants, this fund is expected to promise good returns in future.

5> DSP BlackRock Equity Fund
This diversified portfolio fund is a dividend based scheme ideal for regular investors. Managed by Apoorva Shah, this scheme promises substantial returns of 46.3% for a single year.

6> Kotak NIFTY ETF
This CNX NIFT benchmarked fund is offering an average annual return rate of 43.7% consistently. Managed by young and able fund manager Deepak Gupta, this scheme has managed to offer positive returns even during troubled times.

7> Franklin India Smaller Companies Fund
Offering annual returns of 99.7%, this scheme is the cynosure of Mid-Cap top performers. Benchmarked against CNX Midcap, this fund continues to attract moderate risk-taking investors all over the country.

8> Reliance Small Cap
The multifaceted Reliance fund house has managed to show some magic with equities by launching this fund. Grabbing a surprising return rate of 124.2% for a year, S&P BSE SMALL CAP benchmarked fund has attracted several risk-taking investors.

9> Franklin India High Growth Fund
With a stable return rate of 76.1% for a year, this CNX 500 benchmarked has grabbed the attention of several investors lately. With a strong, diversified portfolio, the risk associated with this scheme is relatively moderate.

10> ICICI Prudential and other Services Fund
A strong market player from the ICICI fund house, this service-themed fund offers a double digit return of 61.2% for a year. Themed around the service industry, this fund shows consistency in returns, even during troubled times.