Best Mahindra Debt Mutual Funds

Mahindra Mutual Fund was incorporated in June 2013. It was renamed as Mahindra Manulife Mutual Fund after the Singapore-based company, Manulife Investment Management Pvt Ltd. acquired 49% of company shares in April 2020. Mahindra Manulife Investment Management Private Limited acts as the investment manager of this AMC, while Mahindra Manulife Trustee Private Limited acts as the Trustee to the mutual fund.

The AMC was founded to provide financing solutions for wealth generation in the risk-reward spectrum to investors in India, focusing on the semi-urban population. Investors have the option to choose from a wide range of debt, equity and hybrid mutual fund schemes that are offered by this AMC. Mahindra Mutual Fund offers over 15 investment schemes, including the best Mahindra Manulife debt mutual funds, while its total assets under management as of the quarter ending on 31st March 2021 was around Rs. 5271 crores.

Investors need to be aware of various risks and conditions associated with mutual fund performances. Therefore, choosing as per financial expectations, stability and understanding the nuances of the funds is imperative before investing.

Debt mutual funds prioritise investing their corpus on fixed income instruments like government bonds, commercial papers, debentures, treasury bills, etc., pertaining to SEBI mandates. These funds, resultantly, have lower risks involved than equity or hybrid mutual funds, which are more reliant on market conditions to be successful. 

As a result, they generate better returns than fixed deposits or recurring deposits in a bank or other financial institutions, it is generally lower than equity or other money market instruments. This is also why most debt funds, including the best Mahindra Manulife debt mutual funds, are often common among investors looking for stability and continued returns.

There are multiple types of debt mutual funds. The classification depends on the type of scheme, the issuer of the underlying securities, duration of the scheme, etc. These types include gilt funds, credit risk funds, low-duration funds, etc. Further, taxation also differs based on the period of the scheme.

Taxability

Short-term Capital Gains: When an investor redeems his/her units before 3 years, the proceeds are known as Short-term Capital Gains. These gains are added to a person’s taxable income.  

Long-term Capital Gains: In contrast to Short-term Capital Gains, Long-term Capital Gains refer to proceeds earned on redeeming debt fund units held for more than three years. An Long-term Capital Gain Tax of 20% is applicable on the gains after indexation benefits.

TDS: TDS is not applicable on debt funds.   

Factors to Consider Before Investing

Alongside knowing applicable taxes, it is also crucial to understand the various factors that help make a better investment decision. These include:

Investment objective: Before investing even in the best Mahindra Manulife debt mutual funds, investors need to identify the investment goals and objectives. While debt mutual funds are more preferred among investors looking for income stability, equity mutual funds are common among those looking for higher and aggressive returns. Therefore, identifying objectives before choosing fund type is imperative.

Risk appetite: Though debt mutual funds are less vulnerable to market fluctuations, investors should assess their risk tolerance towards underperforming investments and sudden change in interest regimes. Remember, even the best of funds like the top Mahindra Manulife debt mutual funds are prone to inflation risks, credit risks, etc.

Maturity period: The length of the debt mutual funds also plays a key role in the returns generated by a fund. The longer is the mutual fund scheme duration, the higher are the chances of affected returns due to changing interest rates, and vice versa. Therefore, choosing according to the investment expectations is essential for investors.

Exit load: Every AMC levies a penalty on an investor's returns if they choose to redeem their MF units prematurely. This is to discourage active investors from withdrawing before the maturity of a fund. As some schemes may not come with an exit load, it is crucial to go through the scheme details for investors. Exit loads of best Mahindra Manulife debt mutual funds differ depending on time left for maturity, scheme duration, scheme type, etc.

Assets under management: The total corpus of a mutual fund scheme is known as assets under management or AUM. Schemes with higher AUM offer a lower expense ratio as the AMC distributes the fund maintenance charges among its investors, affecting their gains. This makes it an essential factor to consider before investing in any top Mahindra Manulife debt mutual funds.

Expense ratio: This refers to the charges levied on an investor to meet the expenses incurred by the AMC for fund maintenance, including allocation charges, salaries of fund managers, administration expenses, etc.  A lower expense ratio ensures more returns and visa-vis.

Fund manager experience: While shortlisting from the top Mahindra Manulife debt mutual funds, it is also important to check the fund manager's track record. Since he/she is in charge of portfolio diversification, a proven track record of managing funds smoothly ensure lesser investment risk.

Credit risk of underlying securities: Investors must check the credit ratings of the instruments held in the portfolio. For example, an AAA-rated instruments have lower chances of defaulting than B-rated instruments.

Past performance: Investors should also note past performances of the funds they think are profitable. Although it is impossible to predict future performances of even the best Mahindra Manulife debt mutual funds 2023, past performance gives an insight into the fund's ability to perform in different market conditions.

Choose investment mode: Mutual fund investment can be made via two methods – SIP or systematic investment plan and Lump Sum. In the case of SIP, individuals can invest monthly, quarterly or yearly, as per convenience. On the other hand, investors need to invest the entire capital in one go in case of lump-sum investments.

Direct or Regular plan: When an investor is investing in a direct plan, he/she purchases MF units directly from the AMC. On the contrary, regular plans involve purchasing MF units through a third-party broker, resulting in higher expense ratios and lower returns.