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Should I invest in Franklin low duration fund? What is the risk involved?

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4 Approved Answers

Ritika

Franklin Duration fund is ultra short term debt fund. Short term funds as the name means term is short which varies from 1 year to 3 years, it varies from people to people and the term is defined by people as their needs vary.

So why Franklin Usd?

Franklin Usd invests its high proportion of money in AA-Rated Bonds(AAA-Rated Bonds means that the bond has virtually no chance of a default.)AA bonds comes below AAA-Rated bonds.

Lets have a look on the returns of Franklin duration fund:

3 Months - 1.82% 

6 Months - 3.31%

1 Yr   - 8.30%

Ultra short debt funds have typically higher returns than liquid funds but risk is high as compared to liquid funds. As interest of funds comes under tax slab rate if holds for less than 3 yrs and 20% tax with indexation benefit on cost.

Note : Advice to new investors - as interest comes under tax slab rate if term is less than 3 yrs(which seems to large to new investors)better to invest in mid cap and diversified funds which yields better than short term funds.

Ankit

Franklin Low Duration fund is a ultra short term debt fund. It has given returns in the range of 9-10% if invested for 3 years or more.

Investments here are made in debt and a small proportion is kept in cash to meet the liquidity needs of the investors. Its ideal for investing money with very low risk for 6 months - 1 year. A modest return of 8-9% can be expected.

Debt funds have two types of risk: 

Credit risk - This is the risk of the underlying securities defaulting. The credit rating is good, the risk is very low. This fund has some credit risk. But because of the diversification the risk is not much.

Interest rate risk - This is the risk of RBI interest rates changing. The risk depends on the modified duration of underlying securities. Since this is a ultra short term fund, interest risk is negligible. 

This fund is more than 10 years old and has consistently given returns higher than the benchmark. Risk involved in this fund is also higher than the benchmark. Half of its investments has been in Financial Services sector. It has an exit load of 0.5% if withdrawn within 3 months of investment.

Investors looking for safe investments and higher than FD returns can invest in this fund. Moreover it also solves the problem of liquidity

Mridul Agrawal

Franklin Low Duration fund is a ultra short term debt fund. It has given returns in the range of 9-10% consistently. It has an exit load of 0.25% if withdrawn within 3 months of investment.

Its ideal for investing money with very low risk for 6 months - 1 year. You can expect ~8.5 -9.0% returns.

Risk involved: 

Debt funds have two types of risk: 

Credit risk - This is the risk of the underlying securities defaulting. The credit rating is good, the risk is very low. This fund has some credit risk. But because of the diversification the risk is not much.

Interest rate risk - This is the risk of RBI interest rates changing. The risk depends on the modified duration of underlying securities. Since this is a ultra short term fund, interest risk is negligible. 

My recommendation: invest if you are looking for safe investments and higher than FD returns, with liquidity. 

Read about other types of mutual funds : here.


Harsh

Franklin Low Duration fund is a ultra short term debt fund. It has given returns in the range of 9-10% consistently. It has an exit load of 0.25% if withdrawn within 3 months of investment.

Its ideal for investing money with very low risk for 6 months - 1 year. You can expect ~8.5-9.0% returns.

Risk involved: 

Debt funds have two types of risk: 

Credit risk - This is the risk of the underlying securities defaulting. The credit rating is good, the risk is very low. This fund has some credit risk. But because of the diversification the risk is not much.

Interest rate risk - This is the risk of RBI interest rates changing. The risk depends on the modified duration of underlying securities. Since this is a ultra short term fund, interest risk is negligible. 

My recommendation: invest if you are looking for safe investments and higher than FD returns, with liquidity. 


Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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