Understanding Gilt Fund's Mechanism

[msa5678]

There is always some risk for reward. Gilt funds can be dangerous at turns. See performance of pure gilt when interest rates were suddenly increased some years back ( Around RR appointment ). They can give -5%+ moves(probably more from peak) in very short term easily and not recover from it for long time. I dont think very long term (~10 yrs) performance of gilt gives enough(or any?) reward for the extra volatility it gives. Best to use them when IR are elevated. Right now they look good looking back because rates have been falling down. I moved from gilt to dynamic earlier and they gave good returns. Now have reduced longer duration.

BSL Treasury optimizer seems nice for lower duration risk for current env. Or if you want even less drawdawns then HDFC Medium Term. These are all for small income above inflation only. Never seen anyone trade bonds here.

Inflation, CAD, Foreign Flows/Rupee movement can impact yields i think but these are hard to predict at turns.

I find ICICI Pru Savings Fund better poised for my requirements, as the growth graph of this fund has no kinks in the recent past. Planning to create a cushion for my exposure to Equity Mutual funds by investing in this fund. By maintaining a certain ratio, say 1:3 or 1:4, any drawdown in the Equity funds will be absorbed by the constant returns from the Savings Fund. Is my calculation right? Or am i missing something? Eventually , concept is to get regular annual returns of 15 to 20%, on a BIG investment.

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[Subhadip]

Go for some good mutual fund in equity like kotak select focus or the funds mentioned in my thread.

Equity: debt=75:25

Debt many r there...but for you liquid fund r good...

U can check my thread for that

 

[msa5678]

Go for some good mutual fund in equity like kotak select focus or the funds mentioned in my thread.

Equity: debt=75:25

Debt many r there...but for you liquid fund r good...

U can check my thread for that

I would prefer Liquid fund:Equity=75:25, The returns will be less with this ratio but a little bit of safety will be there. Was assuming a return of around 15% per annum with this ratio, Let's see how it works out.

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[msa5678]

Go for some good mutual fund in equity like kotak select focus or the funds mentioned in my thread.

Equity: debt=75:25

Debt many r there...but for you liquid fund r good...

U can check my thread for that

Regarding Kotak mutual funds, had one bad experience with them. I had purchased some units in one of their funds, through COIN. When I placed redemption request after some time, I got a message that "Units not available in account". It took a lot of e-mailing to sort the issue. After that episode I have kept away from Kotak mutual funds. Eventhough they have some of the best performing funds, there seems to be some fault in the link with COIN.

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[Subhadip]

I would prefer Liquid fund:Equity=75:25, The returns will be less with this ratio but a little bit of safety will be there. Was assuming a return of around 15% per annum with this ratio, Let's see how it works out.

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U will not get it...liquid fund return around 5-6%per yr

 

[Subhadip]

Regarding Kotak mutual funds, had one bad experience with them. I had purchased some units in one of their funds, through COIN. When I placed redemption request after some time, I got a message that "Units not available in account". It took a lot of e-mailing to sort the issue. After that episode I have kept away from Kotak mutual funds. Eventhough they have some of the best performing funds, there seems to be some fault in the link with COIN.

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Change the coin....not the mutual fund....

 

[msa5678]

Change the coin....not the mutual fund....

Yeah..was thinking of joining mfuindia.com. Looks a better option than zerodha.

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[TracerBullet]

I would prefer Liquid fund:Equity=75:25, The returns will be less with this ratio but a little bit of safety will be there. Was assuming a return of around 15% per annum with this ratio, Let's see how it works out.

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Ratios you decide. Liquid Funds will give you say 1-2% above inflation only. Maybe 6-7% now. Equity is volatile. If you are expecting 15 % every year, then no it will not happen but Equity might give that much annualized after long period.

Also go fore Direct Funds instead of through distributors. You will save 0.5-1 % every year which is a lot.

 

[candle]

Are returns from Liquid Funds Taxable? Do we have to pay Short/Long Term Capital Gain on returns??

 

[msa5678]

Ratios you decide. Liquid Funds will give you say 1-2% above inflation only. Maybe 6-7% now. Equity is volatile. If you are expecting 15 % every year, then no it will not happen but Equity might give that much annualized after long period.

Also go fore Direct Funds instead of through distributors. You will save 0.5-1 % every year which is a lot.

I am not looking for 15% from liquid funds alone. A combination of equity funds and liquid funds in a certain ratio. Initially make LS in liquid fund , simutaneously start SIP in Equity fund, Add more to the Equity fund at every dip of say 500 Nifty points.

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