What debt funds do you use for debt portion of your portfolio?

[silversparrow]

The following are the kinds of debt funds available which we can use in our debt portion of our portfolios (in addition to PPF, EPF, FD, RD etc)

a. liquid/overnight
b. ultrashort
c. short
d. medium
e. gilt
f. dynamic
g. credit risk

Since the primary function of the fixed income portion of the portfolio is capital protection and not returns, the general recommendation is to primarily use liquid/ultra short term debt funds.

I am curious to know what debt funds do all of you use.

 

[resjudicata]

@silversparrow I have invested in the Nippon India Liquid fund.. low risk low returns debt portfolio...

My annual returns for the past 18 months are 4.2%

It's pretty stable and I have it basically to add a stable component to my folio... I have it set up as an SIP

 

[zaraki]

@resjudicata I am a novice in such financial knowledge but if I may ask one question, what is the advantage of investing in that fund if you get only 4.2% interest?

Even some savings bank accounts give more interest than that.

 

[resjudicata]

@zaraki Tbh is just a meta that I wanted to invest in as a hedge against high risk folios.. the returns don't matter to me as long as I know my original corpus is earning some profit out of it...

Those some bank accounts have restrictions..

Here I'm keeping my money away from spending and can be readily liquidated when in need, without too many restrictions

 

[nancy102467]

@silversparrow My emergency fund is in liquid funds(e.g. Quantum, Parag Parikh) & my preferred debt fund used to be L&T UST(0.23 ER, AAA quality papers) but is now Franklin India Saving money market fund because of the great combo of low ER(0.13), low interest rate risk & low credit risk(AAA papers). I also like how FI handled winding up of their six debt funds. My only concern is people pulling money out of Franklin India’s funds and AUM getting dangerously low.

Morningstar gives it a silver rating: https://www.morningstar.in/mutualfu...dia-savings-fund-growth/analyst-research.aspx

Freefincal has it as a preferred fund in their plumbline: https://freefincal.com/handpicked-list-of-mutual-funds-jan-mar-2021/

 

[logant2222]

@silversparrow I did risk-return-volatility analysis across categories...

1. No clear pattern where fund with long modified duration always better than fund with short duration across years
2. If you want peace of mind, "liquid fund" is fine
3. If you want to invest for 5-10 year with proper asset allocation, "short duration", "corporate bond" and "banking and psu" category can be good if you select with due diligence