How to Select Debt Fund?

Selecting Debt Fund: How to Select Debt Fund?

There are several varieties of Debt Mutual Funds available in the market such as Gilt, floating rate, short term, mid term, long term…etc…

But Choosing a right Debt fund is itself a tough job. So Here I will tell you that, How you can select a Right Debt Fund for your portfolio? Well, first of all, You should calculate the Asset allocation for your age and risk appetite. First of all you should decide that, How much money you want to Invest in Debt Mutual Funds.

Once you decide the amount that you want to invest in Debt Mutual Funds, Go to Valueresearchonline.com and search for 4 star or 5 star rated mutual funds. As a rule of thumb, for short term (Less than 3 Years) – Short term Debt Mutual Fund, For Medium Term (3-5 years) – Medium term Debt Mutual Funds or Gilt Funds and for Long term (More than 5 Years) – Long term or Gilt Mutual Funds.

Gilt Funds are somewhat more safer than the Debt Mutual Funds because Gilt Funds mainly invest in Government Securities such as GOI Bonds. But at the same time, Gilt funds offer some what lower Yield than the Debt mutual funds. Debt Mutual Funds are one grade riskier than the Gilt Mutual funds but offer higher Yield than the Gilt Funds.

However, Debt Funds have diversified Investors’ money into a portfolio of Securities from several corporate papers. And hence, the risk of your loosing money is very less. So keep in mind the above few points before selecting a right Debt Mutual Fund for you.