Best JM Financial Debt Mutual Funds

JM Financial Mutual Fund, one of the first private sector mutual funds in India, commenced its operations in 1994. As of 31st March 2021, they have managed a corpus worth Rs. 2389.0753 crore.

Including the best JM Financial debt mutual funds, this AMC offers more than 10 mutual fund schemes. 

Debt mutual funds invest in securities that generate fixed income. Money market instruments like government securities, corporate bonds, treasury bills etc., constitute a debt MF portfolio. These instruments gain or lose value premised upon the interest they offer. 

Usually, a change in interest rate inversely impacts the value of debt security, which, in turn, influences the respective scheme’s NAV. For instance, if interest rates increase, the value of previously issued bonds will dip because of a higher demand for new securities. Conversely, previously issued bonds become more valuable when interest rates decline as investors prefer those over newly issued bonds. It’s an essential consideration to select the best JM Financial debt mutual fund. 

However, returns on a debt fund remain independent of market fluctuations. Therefore, investing in these funds pose a lower risk than equity mutual funds. However, debt funds are known to generate lower returns compared to their equity counterparts. 

Debt MF’s advantages and disadvantages largely vary based on the type of fund an investor chooses. There are around 8 debt fund categories based on the duration and investment objective. These include overnight funds, liquid funds, low duration funds, medium duration funds, credit risk funds, etc. 

Additionally, the best JM Financial debt mutual funds 2023 include more than 5 schemes catering to various needs of an investor. 

Taxability

However, it is vital to know about the taxability of the best JM Financial debt mutual funds before investing.

Short-term Capital Gains Tax: You can sell your mutual fund units before the 3-year mark from the date of investment. In such a scenario, the gains will be taxed as per your income tax slab. For example, if you fall into the 5% slab, you will need to pay 5% + 4% cess as STCG tax.

Long-term Capital Gains Tax: LTCG tax is the tax levied on returns realised after 3 years of investment. A 20% tax with indexation benefits is applicable on the gains on redeeming the top JM Financial debt mutual funds. The tax will be 10% without indexation and 20% with indexation. Such benefits accrued will be valid as long as the investor stays invested in a debt MF scheme. 

TDS: Tax Deducted at Source is not applicable on a debt mutual fund.

Factors to Consider Before Investing

Knowing about taxability will help an individual make effective decisions regarding fund investment and liquidation. However, one should also consider certain factors before going for an appropriate debt mutual fund.

Objectives of investment: Evaluating goals before investing is crucial as it enables you to check whether the fund’s objectives align with yours. This will help you in choosing the best JM Financial debt mutual fund and achieving your planned financial goals conveniently. 

Risk assessment: Before investing in mutual funds, you must weigh the risk factors and your capacity to bear that. Although debt funds are less risky, they are vulnerable to inflation, interest rate, and credit risks. Therefore, it is imperative to assess your risk-taking capacity before choosing the best JM Financial mutual funds. 

Performance of funds: It is crucial to observe the past performance of a fund before investing in it. Reviewing the fund’s performance provides clarity on how it handled money over a prolonged period under different market conditions. However, its previous performance is not a definite indicator of the returns it will generate going forward. 

Expense ratio: A certain portion of a fund’s asset is used for administrative and operating expenses, denoted as the expense ratio. It is important to note this value before opting for a debt MF scheme, as it has a direct influence on your returns. For example, suppose a scheme features 2% expense ratio. If it returns 9% at any point in time and you decide to redeem your investment, your actual gains will be 7%. 

Fund manager’s experience: It’s essential to check the respective fund manager’s experience before deciding to invest in a specific scheme. Their track record can be an indicator of how they efficiently manoeuvre through market ups and downs to meet scheme objectives and safeguard investments.  

Holding analysis: A holding analysis offers clarity on where the resources are invested. It will also enable you to estimate the level of returns and account for the losses in particular market conditions. 

Exit load: Exit load refers to a certain penalty charged by an AMC. An investor may need to incur this fee while exiting a scheme within the lock-in period. However, not all mutual funds levy an exit charge. Therefore, it is necessary to consider this aspect while selecting the best JM Financial debt mutual funds.

With the above points in consideration, one can effortlessly opt for the best JM Financial mutual fund. Although the selection process might seem difficult, understanding the mutual fund basics and market trends can make it comparatively easier.