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Which debt mutual fund is best to invest

Is it right time to invest in debt funds and Particularly to invest in Long term debt or Gilt funds?

Sep 2, 2017 by Naresh Kumar, Bathinda  |   Mutual Fund

Firstly, your decision to invest in debt funds should not solely be driven by interest rate regime. It should depend on what your financial objectives are. If your question is whether one can expect to get high returns from long term debt funds or gilt funds based on RBI actions, then you can get some guidance from the last RBI monetary policy meeting. In the last meeting RBI kept the repo rate unchanged. It also reiterated its policy neutral stance (neither rate cut nor increase) based on inflation risks.

In the last 3 years, top performing long term gilt funds have given double digit annualized returns due to a number of rate cuts made by the RBI. But in the last 1 month, many Gilt Funds have given negative returns. Even the last 3 months returns have been quite low.

So if you are expecting to get very high returns from long term debt funds or gilt funds in the next 6 to 12 months, you may be disappointed. However, if you have three year investment tenure you may get good returns from income funds, maybe not as high as the last 3 year returns, but good returns nevertheless.

Please check the top performing long term debt funds from here

Hope you find our suggestions useful.

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