Wednesday, June 5, 2013

Know how Even gilt funds can be risky

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 

THE term gilt funds often evokes memories of safety and security of investments. This is only partially true and the investor has to ensure that they understand the complete details related to the investment before committing money to this area. This can also avoid a situation where the investor is left searching for answers after witnessing an unexpected position. Here are some angles related to gilt mutual fund investment that every investor should know. Higher interest rate risk The gilt funds invest in government securities and are then traded by the fund manager in the debt market.


Surprising, as this may seem, it actually results in a situation where there could be higher risk for the investor on account of interest rate risk, which is not present in some other instruments like fixed deposit.

Since, there is a lot of trading in the government securities, the investor will find that the securities are extremely sensitive to the various changes that are being witnessed on the interest rate front. For longer dated securities the changes are quite sharp. If the fund manager may have built a position; whereby expecting the interest rates and yields to behave in a certain manner, but if the opposite turns out to be true then there could be a reduction in the value of the securities. This will result in a lower net asset value and the investor will suffer in terms of either a lower return or in some cases even a negative return. Position in portfolio The gilt funds should be considered, as an investment option only when the investor knows about the working of the debt markets and the manner in which the prices of such instruments will react to different changes.

The other point is about the position that the fund will occupy in the portfolio. It should not be given a role, whereby it is supposed to meet the regular income needs of the individual because this might be possible when the times are good, but the going will be tough if the debt market conditions are not conducive. The position should be such that it is able to make use of the opportunities and deliver the required gains when the situation moves in favour of the individual. This is something that needs primary attention so that the risk of the investor is also limited. The other way in which gilt funds can be seen is using them as a route for investing only during those periods when the interest rates in the economy are expected to fall. If the rates actually fall and there are investments into long term gilt funds then the returns earned can also be above average.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

0 comments: