Banking and PSU Debt Funds to Invest in 2020

SEBI has introduced new sub category in debt funds which is banking and PSU debt fund. These funds have performed well and have given upto 8%- 10% annualized returns in the last 6 months to 5 years tenure.

These Banking and PSU debt mutual funds would invest in debt instruments of PSU enterprises and banks. It would invest in AAA rated debt instruments or relevant rated depending on the objectives of the scheme. Since it invests in debt instruments of PSU enterprises other than banks, these are considered as a relatively safe investment option even during crisis.

Investors, who are concerned about investing in debt mutual funds and are looking for moderate risk debt funds, can opt for Banking and PSU debt mutual funds.

Here are top 5 mutual funds from this category:

*NAV as on 28th July 2020, Source of Data - Moneycontrol

If you are looking for relatively safer investment options in the debt mutual fund category to invest for 1- 3 years or more, you may consider investing in these schemes. These may offer you some extra after tax returns than the traditional bank fixed deposits.

Investments held in debt mutual funds for more than 3 years qualify for long-term capital gains tax of 20% with indexation benefit. The indexation helps to reduce the purchase cost and bring down the rate of tax considerably in an inflationary scenario. Interest on bank deposits are added to the income and taxed according to the income tax slab applicable to the investor.

You can use GIIS Financial tools or Our Android App  for Investment, tracking and Asset allocation planning. 

*Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

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