Best BOI AXA Debt Mutual Funds

A joint venture between Bank of India and AXA Group, a financial protection business, in 2012 led to the creation of the BOI Axa Investment Managers Pvt Ltd. BOI has a wide presence in India with over 5000 branches and is present in around 22 countries. AXA Investment Managers is the asset management wing of AXA Group, which operates in over 20 countries with total assets under management (AUM) of Euros 858 billion. 

They offer 10+ different mutual fund schemes in equity, hybrid and debt fund categories. 

Debt mutual funds invest predominantly in fixed-income debt instruments, including government securities, corporate bonds, money market instruments, debentures, deposit certificates, commercial papers etc. Investing in the best BOI AXA debt mutual funds let investors get a regular income and grow wealth steadily. Moreover, these are mostly risk-free, as they do not get directly affected by market fluctuations. 

Debt funds generate profits by lending money to the government and corporate entities who offer a security promising steady and regular payments. They are safer than equity and hybrid funds while providing more returns than traditional fixed income sources like fixed deposits. They have moderate returns usually not affected by the market, and thus, their NAV does not fall sharply even during a market collapse. However, even the top BOI AXA debt mutual funds do not offer high returns compared to equity funds. 

BOI Axa offers around 5 debt mutual funds with different investment periods and asset allocation. 

Debt funds come in various categories depending on their type of assets, investment period and risk factors. These include Overnight, Liquid, ultra-short duration, and low duration funds with investment periods ranging from 1 day to a year. A lower investment period usually offers lower but very stable returns. On the other hand, short, medium, medium-long and long duration debt funds have an investment period from one to seven years and provide moderate returns with more risks. 

The best BOI AXA debt mutual funds can also be categorised on asset allotment. Money market, corporate bond and Gilt funds invest in money market instruments, AAA-rated corporate funds and government securities, respectively. These carry no credit risks but can generate very low interests in rising markets. Dynamic bond and credit risk funds have moderate levels of risks but provide higher returns.

Taxability

Before investing, knowing about the taxability of such funds is crucial. 

Long-term Capital Gains (LTCG) Tax: This is applicable for funds held for more than three years. This charge is at a rate of 20% with indexation benefits added. 

Short-term Capital Gains (STCG) Tax: This is applied to funds held for up to a period of three years. The STCG is added to the income tax and charged as per an investor’s tax slab.

TDS: A standard 10% TDS is applicable on dividends in excess of Rs.5000 a year. Earnings lower than this amount does not draw such a tax.

Factors to Consider Before Investing

Given are some of the most important factors to look out for before selecting the best BOI AXA debt mutual funds 2023. 

Returns: Debt funds sacrifice higher returns for fewer risks and higher liquidity. However, their returns are usually within a predictable range and do not change with market fluctuations. The NAV (Net Asset Value) of a debt fund rises with a fall in interest rates in the economy. This makes them suitable tools to offer financial stability to equity traders. Debt mutual funds offer better returns than fixed deposits.

Risk factor: Debt funds have the lowest risks compared to all other types of mutual funds. They have assets in fixed income sources and market fluctuations do not directly influence them. However, debt funds that invest in low-credit rated assets can have slight credit risks. Most debt funds also carry an interest-rate risk as bond prices fall after an increase in interest rates. The best BOI AXA debt mutual fund has more risks compared to fixed deposits but offers returns that can keep pace with inflation.

Credit ratings: Debt funds invest in debt instruments that come with credit ratings given by rating agencies. Top corporations get the very highest ratings, as they are very unlikely to default on payments. AAA-rated corporate bonds, government securities and treasury bills have the highest credit ratings and are usually very stable. Some debt funds, like credit risks funds, invest in lower-quality debt securities as a calculated risk for higher returns. 

Investment period: Short investment periods of up to six months work are the best BOI AXA debt mutual funds with low-risk and high liquidity. These are ideal for retirees who do not want to take risks but want better returns than fixed deposits. A longer investment horizon allows better returns without having to take any credit risks. Medium duration and long duration funds with investment periods of three to seven years provide moderate returns among debt funds. 

Expenses: Debt fund managers of the best BOI AXA debt mutual funds charge a fee called an expense ratio to manage investors’ money. All mutual funds levy a certain charge to cover the fund manager’s service. Some funds also charge an exit load.

These are some of the essential parameters to consider before choosing the best BOI AXA debt mutual funds.