ICICI PRUDENTIAL Debt Mutual Fund offers 44 different types of mutual fund schemes under the debt mutual fund category. The total AUM belonging to ICICI PRUDENTIAL AMC schemes as on March 2023 is Rs 516,343 crores. The debt schemes include liquid funds, gilt funds, corporate bond funds, ultra short to long duration funds, banking and PSU funds, money market funds, and credit risk funds.
ICICI Debt Funds are less volatile in comparison to equity funds because they invest predominantly in fixed income instruments. Investors who prefer traditional instruments like fixed deposits, recurring deposits and parking funds in savings accounts can consider investing in ICICI Debt Mutual Funds. These schemes are less volatile and have the potential to deliver higher returns than other traditional investment instruments. However, it is better to pick debt funds based on financial goals. Also, ICICI Debt Funds are highly liquid, where investors can park their emergency or surplus funds for a shorter duration (usually less than 12 months). Moreover, many investors consider ICICI debt schemes as a measure to diversify a portfolio across asset classes.
Things To Consider Before Investing in ICICI Debt Mutual Fund
Investment Objective: The investment objective of ICICI Debt schemes is to generate reasonable returns with lower risk and high liquidity. To achieve its objectives, ICICI Debt Mutual Funds invests in fixed income instruments, money market instruments, and government securities belonging to different maturities and risk profiles.
Investment Strategy: The ICICI fund manager(s) aim to deliver reasonable returns keeping the risk factor low depending on the fund investment strategy. Also, ICICI debt schemes optimise the risk opportunities and maintain the balance between risk and returns. Furthermore, the fund manager keeps an eye on the country’s micro and macroeconomic situations to assess the direction of interest rates. Accordingly, investors can align their investment goal with the fund investment strategy for wealth generation.
Associated Risk: ICICI Debt Mutual Funds carry a lower risk in comparison to equity mutual funds but carry a risk higher than fixed deposits and similar fixed income products. However, these ICICI Debt Mutual Funds also have the potential to deliver higher returns. Also, ICICI Debt Funds are subject to interest rate, credit, and liquidity risk. Moreover, as a risk reduction and control technique, the ICICI AMC’s fund manager will conduct a thorough credit evaluation of the issuer company. Therefore, it is crucial for investors to understand the risk associated with these debt schemes before investing in them.
An income arising from the sale of ICICI Debt Fund schemes generates a capital gain. Capital gain on ICICI Debt Mutual Fund is taxable depending on the holding period. The following table shows the taxation of ICICI Debt Mutual Funds –
Short Term Capital Gains (STCG)
Long Term Capital Gains (LTCG)
Holding Period
If holding period is less than 36 months
If holding period is more than 36 months
Taxation
Capital gains are taxable as per investor’s income tax slab rates. The STCG is added to the gross total income for the financial year.
Capital gains are taxable at a rate of 20% with indexation benefit.
