Debt Funds & Reliance Medium Term Fund
What Is Debt Funds
A mutual fund or exchange traded fund which gives more preference to debt market instruments called debt funds. Debt market instruments include short term or long term bonds, securitized products and money market instruments. The charges in debt funds are lower than equity funds. Debt fund saves your capital from violent equity adventures. Diversification of capital is an essential practice in the modern times. You should not put your all eggs in one basket. Systematic and strategic allocation of money will save you from the unpredicted market conditions. Debt market has its own relevance in the changing market conditions.
Shyam was a student in Ahmadabad. He was an IT professional. He was very interested in stock market investing. He used to trade by sitting in the broking firm. He was earning Rs 20000/ in a month. He cleverly allocated his funds among the investment options like debt funds and equity funds. Some of his friends advised him invest his full amount to equity market. But he refused. He invested a part of amount in the money market instruments. He did not care the comments from his friends. He believed that it was the right strategy. 2008 was a horrible year for global markets along with the Indian markets. His friends lost their money in the equities. Shyam did not have any problems by his clever allocation. If he obeyed his friends, he would lose money.
Stock market investment is a just like starting a business. If your company working well and makes profit, it can be shared. But if your company is going to loss, you may lose your fund. A part of money should be invested in stock market. 30% of your total investment should be in debt funds. Reliance Medium Term Fund is a very popular debt fund in India.
Reliance Medium Term Fund
It is an open ended debt fund by reliance Mutual Fund. Asset size of the fund is Rs 1,955.52 Cr. Fund launched in 2000. Rs 5,000 is the minimum investment. Fund’s one year return is 7.5%. Nifty’s one year return is (-1.4) %. Fund could save the capital of investors in last year. 2008 was a horrible year for global capital markets. Nifty gave a negative return of 51% in that period. Fund gave 7.9% return in 2008. If a part of the amount is invested in the fund, investors would not be fallen into big losses. The fund gave 6.8% annualized return in the last three and five years.