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Aditya Birla Sun Life AMC Limited

Aditya Birla Sun Life AMC Limited

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    Aditya Birla Sun Life AMC Limited

    Saving Solutions: Debt Fund Saving Solutions - Aditya Birla SunLife Mutual Fund

    Debt Mutual fund

    Saving Solution

    Debt Mutual Funds

    Saving Solutions aim to protect your capital while providing stable, tax-efficient returns. The primary intent of our saving solution is to help investors with short investment tenure preserve their money.

    Unlike conventional saving instruments, our saving solution schemes seek to provide tax efficient returns with potential liquidity & low risk. The schemes under this solution seek to invest your funds in government-backed securities, AAA corporate bonds, fixed-income products, money market instruments etc.

     

    Benefits of Saving Solution scheme


    • • Stable returns
    • • High liquidity
    • • Investment flexibility

    Who should invest in Saving Solutions?


    • • New Investors
    • • Conservative Investors
    • • Investors Seeking Regular Income
    • • Investors Seeking Stable Returns
    • • Investors with Short-Term Investment Horizons
    • • Investors Requiring High Liquidity
    Fund Categories

      Short term Fund: Schemes whose average maturity over the last 6 months is between one year and 4-5 years.

      Ultra short term: Schemes whose average maturity is less than one year, but which are not liquid schemes.

      Liquid: Schemes which do not invest in securities with a residual maturity of more than 91 days.

      Gilt (medium and long term): Schemes which invest in government securities and can vary their average maturity.

      Gilt (short term): Schemes which invest in government securities whose average maturity over the last six months is between one year and 4.5 years.

      Arbitrage: Schemes which seek returns from arbitrage opportunities between equity and derivatives and invest in debt when no arbitrage is possible.

      Income: Schemes which can vary their average maturity widely as per the declared objectives; these invest in government securities, money markets, bonds etc.

    FAQs

    • What kind of mutual funds are included under Saving Solutions?

      Saving solutions comprise of debt mutual funds. These funds invest in fixed income instruments such as government and corporate bonds as well money market instruments.

    • Are debt funds the right kind of investment for you?

      If you are looking for an investment avenue that can help you earn returns at a lower risk and with a lower time frame than equity, then these funds can be the solution for you. They are suited for investors who are looking for relatively fixed returns at lower levels of risk and high liquidity.

    • What kind of time period should I look to stay invested in debt funds for?

      By and large, these funds are best suited for investing for short to medium. This can range from 1 day to a year for short term and up to 3-5 years for medium term, depending on thetype of specific debt fund.

    • Apart from fixed interest-based returns, can these funds also result in capital appreciation?

      Yes, these funds do have scope for capital appreciation. This is possible when interest rates fluctuate in the market. To illustrate, suppose a Debt fund has invested in a bond which has a fixed 9% coupon rate for 3 years, if the interest rate falls in the market – then newer bonds issued would be at lower coupon rate. This would result in a rise in price of the bond which carries a higher rate than the market coupon rate.

    • Do Debt funds guarantee return?

      Debt funds are less volatile than equity-based funds, yet they do carry some degree of interest rate risk and credit risk. Interest rate risk is the risk associated with reduction in price of debt securities due to changes in market interest rates. Credit risk indicates risk of default of principal repayment – this is impacted by credit quality of the investment.

    • Are there any debt funds with no credit risk?

      Gilt funds, which are a type of debt funds investing entirely in government securities. As these are backed and guaranteed by the government, they do not carry any risk of default of principal repayment i.e.: no credit risk. They still however may carry limited interest risk.

    • How are these funds taxed on redemption?

      Pursuant to amendment to the Finance Bill 2023, any capital gains earned on investments made on or after 1 April 2023, will be added to the investor's income and taxed at the applicable income tax slab rates (plus any applicable surcharge and cess), regardless of the investment holding period.

      Please note that investments made on or before March 31, 2023 and held for more than 36 months will be eligible for indexation benefit in taxation. Gains on such investments will be taxed at a rate of 20% (plus applicable surcharge and cess) after taking into account the indexation benefit.

    Funds Under Saving Solutions

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