Which is the best floating rate fund I should invest Rs 2,500 per month for three years and get average returns at 8% per annum?
Vishal Dhawan, founder, PlanAhead Wealth Management, a financial planning firm, based in Mumbai, responds:
— Hitesh Bhateja
Vishal Dhawan, founder, PlanAhead Wealth Management, a financial planning firm, based in Mumbai, responds:
Your return expectations from debt funds, especially floating rate funds are very high. Remember we are in a low interest rate environment and which may start reversing in the next couple of quarters, depending on how the growth and inflation data pans out.
Floating rate funds do tend to do better than the fixed rate funds in a rising interest rate environment. Funds to consider in the floating rate category are HDFC Floating Rate Debt Fund or Aditya Birla Sun Life Floating Rate Fund, but return expectations should be lower as compared to your expectations.
