Sundaram Debt Mutual Funds

Investment Objective

Sundaram Debt Mutual Funds are a category of mutual funds that aim to provide individuals interested in investing with a steady income stream and a safe capital increment for a few years. The primary securities these funds invest in include treasury bills, corporate bonds, deposit certificates, government securities, and money market bills. The investment objectives of Sundaram Debt Mutual Funds vary depending on the type of fund, such as short duration, ultra-short duration, corporate bond, etc. Some common objectives are to generate regular income, preserve capital, maintain liquidity, and optimise returns.

Risks Involved in Sundaram Debt Mutual Funds

Sundaram Debt Mutual Funds involve some risks that may affect the fund's value and returns. Some of the risks include market volatility, credit and liquidity risk, and risks pertaining to the maturity period. Moreover, the degree of financial peril involved in Sundaram Debt Mutual Funds may vary depending on the type of fund, the quality of the bonds, and the investment horizon of the investors. Investors should keep in mind their financial capacity and their willingness to keep the funds invested for a certain period of time. Moreover, this goes in tandem with the investor’s monetary objectives before deploying their capital.

Return Potential of Sundaram Debt Mutual Funds

Sundaram Debt Mutual Funds have the potential to harvest more income than usual schemes like fixed deposits or savings accounts. It is noted that Sundaram Debt Funds have delivered about 10% returns on average in a span of four to five years. However, the actual returns may vary depending on the type of fund, the duration of the bonds, and the market conditions. The best Sundaram debt mutual funds may offer stable and predictable returns over the short to medium term by investing in various fixed-income instruments with different maturity periods and credit quality.

Who Should Invest in Sundaram Debt Mutual Funds?

Investors who are looking for a capital gain with a steady income flow for at least a tenure of five years can look to invest in Sundaram Debt Mutual Funds. Sundaram Debt Mutual Funds have produced relatively stable returns than equity funds or hybrid funds. These funds are also ideal for those looking for low-risk with higher returns than a fixed deposit.

Things To Consider Before Investing in Sundaram Debt Mutual Funds

Before investing in Sundaram Debt Mutual Funds, investors should consider the following factors:

• Risk appetite: Sundaram Debt Mutual Funds carry low to moderately high market risk as compared to equity funds. Investors should assess their risk tolerance and choose the fund that matches their risk profile.
• Investment objective: Investors should have a clear investment goal and time horizon before investing in these funds.
• Past performance: The past performance of Sundaram Debt Mutual Funds can indicate their consistency and reliability in delivering returns.
• Expense ratio and exit load: The expense ratio is the annual fee charged by the fund house for managing the fund. The exit load is the fee charged by the fund house for redeeming the fund before a specified period. These fees can affect the net returns of the investors. Investors should compare the expense ratio and exit load of different funds and choose the one that offers low fees and high returns.
• Fund manager’s experience: The fund manager is responsible for selecting and managing the debt securities in the fund portfolio.

Tax on Sundaram Debt Mutual Funds

Sundaram Debt Mutual Funds are subject to tax on two types of returns: dividends and capital gains.

• Dividends: Dividends received by investors are added to their taxable income and taxed at their respective income tax slab rates.
• Capital gains: Capital gains are taxed differently depending on the holding period of the fund units. The holding period is the duration between the date of purchase and sale of the fund units. If the holding period is less than three years, it is termed as short-term, and the resulting capital gains are called short-term capital gains (STCG). If the holding period is over three years, it is termed as long-term, and the resulting capital gains are called long-term capital gains (LTCG).