Best Navi Debt Mutual Funds

Anmol Cormo Broking Private Limited is the investment manager of Navi Mutual Fund, which is registered with SEBI and sponsored by Navi AMC Limited. As of 31st March 2021, this AMC had Rs.697.75 crore as AUM.

This AMC offers approximately 10 mutual fund schemes distributed across equity, debt, and hybrid fund categories. Those include the best Navi debt mutual funds.

Primarily investing in fixed-income instruments, debt mutual funds yield standard interest income and involve comparatively lower volatility than other asset types. Debt mutual funds can be categorised into several sub-categories: duration funds, gilt funds, overnight and liquid funds, and credit risk funds. These funds are also known as bond funds or fixed-income funds.

The securities where these funds invest include corporate bonds, commercial paper (CP), government securities, T-bills, certificate of deposits (CD), and other money market and debt instruments. The issuers of these instruments borrow funds from lenders against the instrument, hence the name ‘debt’ fund. The instruments have different maturities and are capable of generating income at maturity or periodically.

Retail investors cannot directly purchase a majority of the debt instruments as the required minimum investment amount is considerably high. To that end, investments in the best Navi debt mutual funds 2023 can meet those requirements easily. When the rates of interest reduce, these funds usually offer the benefit of significant capital appreciation.

Reasonable safety, low-cost structure, comparatively stable returns, and high liquidity are several advantages of investing in debt funds. 

A variety of debt funds can feature in an investor’s portfolio based on their risk appetite and investment goals. The top Navi debt mutual funds make investments across all security classes, thereby optimising and earning fair returns. Having mentioned this, an investor must note that these funds do not commit guaranteed returns. These returns are usually predictable, suiting a conservative investment approach. Debt funds are also ideal for investors having both short and medium-term investment horizons.

The current mutual fund offerings of this AMC include about 3 debt mutual funds.

Besides being aware of the facts illustrated above regarding the best Navi debt mutual funds, an investor must note the following parameters.

Taxability

Short-term Capital Gains Tax: The short-term capital gains or STCG on a debt fund gets added to an investor’s taxable income and are taxed at the income tax slab rate. Gains qualify as short-term when earned from units held for less than 3 years.

Long-term Capital Gains Tax: Long-term capital gains or LTCG are taxed at a 20% rate after indexation. The investor also incurs applicable surcharge and cess. 

Factors to Consider Before Investing

Risks: Credit and interest rate risk are some of the risks associated with debt mutual funds. Credit risk is involved when a fund manager invests money in low credit-rated securities. A low credit rating implies a high default probability. On the other hand, interest rate risk refers to fluctuations in the prices of underlying bonds when there is an increase or decrease in market interest rates. This would, in turn, result in low ROI for the investor.

Returns: The best Navi debt mutual funds do not commit guaranteed returns, although they make investments in fixed-income securities. The Net Asset Value (NAV) of these funds lower with a rise in the overall interest rates in the economy. However, returns on debt MFs are lower in general than equity and hybrid funds. 

Investment objective: To select the best Navi debt mutual fund, one must be aware of his or her investment objective. As every debt mutual fund caters to a specific investment goal, being clear with this objective would enable investors to choose an apt scheme.

Expense ratio: Expense ratio is a charge levied by mutual fund companies for the services they offer and for the fund manager’s expertise.

Scheme’s past performance:  A fund’s past performance does not hint at probable returns, but still having a check on them is prudent. It can offer insights into a scheme’s fundamentals and how well it has managed risks and liquidity over the years to generate healthy returns.

The investment domain can prove to be a challenging sector altogether for first-time investors. Nevertheless, having basic knowledge about debt mutual funds and treating this article as a guide would make it simpler to select an apt scheme among the best Navi debt mutual funds.