- Wealth PMS (50L+)
So a lot of questions have come in after my Yahoo post on short term debt funds ("Reconsider that Fixed Deposit"), about which funds to choose. Here are the three that I have invested in:
Yes, HDFC’s fund hasn’t done quite as well, but that’ll jump around between the three.
1) Go to Value Research Online’s "Funds" Comparison section (I have pre-filled the objectives, but it’s the "Category Compare" for "Debt: Ultra Short Term"
2) Click the 1-M Return and 3-M return headers, to rank the funds in ascending order.
3) Choose a fund that figures among the top and click on it. Example: JM Money Manager Super.
The important areas are:
4) Click the Portfolio Tab, and check the securities the fund has invested in:
5) Lastly, check the "Fund Details" page. You need to ensure there are no weird exit loads. Don’t bother with funds that have an exit load greater than a month.
Note: there is a lot more to explore in there, and VRO has a PDF for each fund that you can check too. The important point is to ensure they are keeping the credit quality and tenures good enough; and when funds stop showing this kind of return, it’s time to exit. You need to expect about 8% to 9% per year on the ultra-short terms.