Best Performing and Top Long Term Debt Funds in India

AUM of at least 100 crores Performance over different periods of time are taken into account. Source of data: moneycontrol.com

Best Performing Debt Funds and Income Funds among Top Debt Mutual Funds in India

The Top 20 and Best Performing Ultra Short-term Debt Funds in India

Interest rates could stabilize over the next 6 months. Short –term funds had a good run this year on account of RBI’s monetary policy.

There is a likelihood of a pause, and these Ultra Short-term Debt Funds schemes may not be as attractive going forward. The higher returns seen in this category may not sustain for more than 3-6 months.

We will cover the medium/long-term income funds in another post. The following table ranks the ultra short-term debt funds based on a longer term horizon. Only funds with AUM over 100 crores have been considered for this analysis.

Birla Sunlife Floating Rate Fund, JM Money Manager, Birla SL Ultra Short Term, BNP Paribas Money Plus, and Kotak Floater are the top five. These funds are clocking close to 9% this year, and couple of these might provide 10%. That’s awesome considering the performance of the equity markets. Investors can ride this wave while slowly starting to increase exposure to medium/long-term or gilt and dynamic bond funds.

 

FUND	CRISIL RANK	AUM (Rs Cr)	1mo	3mo	6mo	1yr	3yr	5yr	EARLYGAINS RANK
Birla SL FRF - LTP - RP	Rank 1	130.17	0.7	2.3	4.7	8.8	7.8	8.2	1
JM Money Manager Fund -SPP	Rank 3	753.16	0.8	2.3	4.6	8.9	6.8	7.7	2
Birla SL Ultra Short Term -RP	Rank 1	265.97	0.7	2.3	4.5	8.7	6.5	7.6	2
BNP Paribas Money Plus - RP	Rank 3	133.17	0.7	2.1	4.3	8.6	7	7.7	4
Kotak Floater LTP	Rank 3	4031.15	0.7	2.2	4.6	8.9	7	7.7	5
Principal NTF - Conservative	Rank 3	403.75	0.7	2.2	4.6	8.9	6.7	7.6	6
Reliance Floating Rate	Rank 5	1218.58	0.7	2.1	4.5	8.7	6.8	7.6	7
JM Money Manager Fund -SP	Rank 2	203.22	0.8	2.4	4.8	9.4	7.5	7.8	8
Tata Floater Fund	Rank 2	4672.52	0.7	2.3	4.6	9	6.9	7.6	8
Principal NT - Moderate Plan	Rank 2	185.29	0.7	2.2	4.2	8.6	6.5	7.4	10
HDFC Float Rate Inc-STP RP	Rank 2	640.13	0.7	2.1	4.3	8.4	6.5	7.3	11
DWS Ultra STF - RP	Rank 3	117.07	0.7	2.2	4.5	8.5	6.5	7.3	12
Kotak Flexi Debt	Rank 5	188.42	0.7	2.1	4.4	8.2	6.1	7.1	13
HDFC CMF-Treasury Advg	Rank 1	6598.17	0.7	2.1	4.3	8.4	6.5	7.2	14
Birla SL Saving Fund - RP	Rank 3	575.92	0.7	2.2	4.5	8.6	6.5	7.2	15
L&T Freedom Inc -STF -G	Rank 3	545.58	0.7	2.2	4.5	8.8	6.5	7.2	16
ICICI Pru Floating RP - A	Rank 1	380	0.7	2	4.1	8	5.9	6.9	17
JM Money Manager Fund -RP	Rank 3	288.74	0.8	2.4	4.9	9.5	6.7	7.2	18
UTI Floating Rate -STP-RP	Rank 3	482.16	0.6	1.9	4	8.1	6.6	7.1	18
Birla Sun Life Cash Manager	Rank 4	713.11	0.7	2.2	4.4	8.4	6.3	7	20

Source of Data: Moneycontrol.com

Top and Best Performing Ultra Short-Term Funds

• The best place to park money right now is in ultra short-term mutual funds. 
• Here are some top ultra short-term funds providing handsome returns. 
• Many of these best performing funds have to holding period of 45-90 days to avoid exit load (0.5-1%).

The table provides 3-month returns for ultra short-term debt mutual funds.

Top Performing Floating Rate Mutual Funds (Debt Funds)

It’s not clear when the policy-tightening cycle will end. This is the time to lock some money in fixed income instruments such as bonds and fixed deposits. Floating rate instruments give a market related rates of return without much added price volatility. The interest rates are high, interest payments in floating rate instruments also go higher. Here are floating rate mutual funds (debt funds) that have done well recently with increasing rates.

Do you want to ride the high short-term interest rates? Here are some selected new mutual fund instruments.

With rates near cycle highs, investing in best fixed maturity plan FMP, short-term mutual funds, ultra short-term mutual funds and related fixed income instruments may be a better option. Equity investments at this stage require at least a 2-3 year horizon.
The following are new  and selected short-term, ultra short-term, FMP mutual funds being offered by various AMCs as of June 18 2011.

Company Fixed Deposits in excess of 12%. But watch out!

In an earlier post, Company Fixed Deposits as a higher risk-higher reward instrument was profiled. Now some companies are giving rates in excess of 12%.  Did you know that these companies pay 1-2% commissions to agents who pitch these unsecured FD products to you. In essence, these companies are paying some 15% for your funds. They are doing this because they are not able to tap secured loans from banks due to various reasons.

As mentioned earlier, investors should realize that these FDs are more risky that bank FDs and offer no capital protection.   Some of these companies have been raising their unsecured loans by a significant amount. TV18, for example, has over 500 crores in unsecured loans in its sheet. While I don't expect TV18 to disappear overnight, there is a significant risk in these investments. Investors should look at the CRISIL credit rating (or equivalent) of these companies before giving the money to the agent.

COMPANY	RATING	Min. Deposit Amount	INTEREST RATE
			6	12	24	36
Jaiprakash Associates Ltd.		20000	10.50	10.50	11.00	11.50
Ansal Properties & Infrastructure Ltd		50000	11.50	12.00	12.25	12.50

The best performing Mutual Funds in Liquid and Ultra Short-Term Mutual Funds

Liquid funds, money market funds, ultra short-term Mutual Funds are good for parking surplus funds that is likely to be deployed elsewhere in less than 2-3 months.  Liquid mutual funds hold securities with maturities of less than 91 days. Liquid mutual funds provide opportunity to earn returns higher than savings bank account. Ultra short-term bond funds can hold securities of maturity longer than 91 days and hence can provide marginally higher returns than liquid funds. Money in a liquid fund can be redeemed within a day. Tax on dividend income is 25 per cent for liquid funds and 12.5 per cent for other debt funds. Capital gains tax is applicable on liquid funds and indexation benefits apply for debt funds.

When considering investing in debt schemes, it's important to consider the average maturity profile of the portfolio (published in AMC website). To reduce the risk of volatility, the investor's holding period for the fund should be close to the fund's average maturity profile.

How have Liquid Funds performed? The following are the best performing Liquid mutual funds ranked based on risk adjusted performance. These funds have produced annual returns in the 7-8% range, which is much better than your bank account.  LIC MF Liquid Fund, HDFC Cash Management Fund and HDFC Liquid Fund have performed very well over short as well as longer period of time.  So, check your savings account balance and park your money in these funds instead.

FUND	AUM (Rs Cr)	NAV	1wk	1mo	3mo	6mo	1yr	2yr	3yr	5yr
LIC MF Liquid Fund	8,053.79	18.05	0.1	0.7	2	3.8	6.7	11.7	21.8	41.8
HDFC Cash Management	2,403.08	20.63	0.1	0.7	2.1	3.9	6.8	11.7	21.2	40.9
HDFC CMF-Treasury Advg	5,782.69	21.40	0.1	0.7	2	3.8	6.7	11.6	20.9	40.6
Principal Cash Management	731.77	15.36	0.1	0.7	2	3.9	6.7	11.3	20.8	40.2
HDFC Liquid Fund	539.17	19.51	0.1	0.7	2	3.8	6.6	11.2	20.5	39.8
Birla Sun Life Cash Manager	234.81	24.01	0.1	0.7	2	3.7	6.5	11.1	20.2	38.8
UTI Money Market Fund	125.00	2,742.94	0.1	0.7	1.9	3.7	6.3	10.9	20.5	38.9
SBI Magnum Insta Cash	3,320.77	21.92	0.1	0.7	2	3.9	6.8	11.1	20.2	38.8
IDFC Liquid Fund	478.73	1,392.95	0.1	0.8	2.3	4.2	7.2	11.9	19.5	38.4
Reliance Liquid Fund TP	727.57	23.58	0.1	0.7	2	3.8	6.4	11.1	20.4	38.5
Birla SL Cash Plus - RP	202.46	26.07	0.1	0.7	1.9	3.7	6.1	10.1	19	37.7
Templeton Treasury MA	199.33	2,419.35	0.1	0.7	1.9	3.7	6.4	10.6	19.8	38.1
UTI Liquid Cash Plan	354.99	1,588.70	0.1	0.7	1.9	3.7	6.3	10.5	19.5	37.9
ICICI Pru Liquid Plan	406.55	236.96	0.1	0.6	1.9	3.6	6.1	10	18.8	37.3
L&T Liquid	238.58	19.60	0.1	0.7	2	3.8	6.4	10.7	19.8	37.7
DSP-BR Liquidity Fund	163.65	23.42	0.1	0.7	2	3.8	6.7	10.4	18.9	35.8
HSBC Cash Fund	102.55	15.79	0.1	0.6	1.8	3.3	5.7	8.1	15.4	33.1
IDFC Cash Fund	102.26	17.52	0.1	0.7	1.9	3.7	6.4	10.6	19.3	34.6
Reliance Liquid - Cash	638.21	16.00	0.1	0.7	2.1	3.9	6.4	8.9	15.5	29.5

The numbers are absolute return.

See this article for ultra short-term funds.

Happy Investing!

The best performing Mutual Funds in MIP - Best Monthly Income Plan

AUM of at least 100 crores Performance over different periods of time are taken into account. Source of data: moneycontrol.com

Float with these Floating Rate Funds

 

When interest rates are high, interest payments in floating rate instruments also go higher. Several floating rate funds have done well recently with increasing rates. Floating rate instruments give a market related rates of return without much added price volatility.

 

The following are some good floating rate mutual funds and their historical performance (absolute return%).

 

FUND	AUM (Rs Cr)	NAV	1wk	1mo	3mo	6mo	1yr	2yr	3yr	5yr
HDFC Float Rate Inc-LTP	1,501.46	16.97	0.1	1.4	2.8	4.3	7	14.5	25.8	45.4
Birla SL FRF - LTP - RP	218.84	16.89	0.1	0.8	2	3.8	6.7	15.1	25.3	45.9
Reliance Floating Rate	2,739.10	15.53	0.1	1.2	2.5	3.9	6.9	12.1	22.2	42.4
Can Robeco Float Rate-STP	142.16	15.27	0.1	0.8	2.2	4.1	7.1	12.2	22.5	42.7
Tata Floater Fund	6,303.53	14.72	0.1	0.8	2.1	4	7	12.2	22.4	42.6
Kotak Floater LTP	3,482.74	15.64	0.1	0.8	2.1	4	6.8	12.2	22.2	43.1