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Time of India
12-06-2025
- Business
- Time of India
Midcap mutual funds deliver 19% return in 3 months. Check top performers
In May, the midcap funds received an inflow of Rs 2,808 crore, witnessing a decline of 15% month-on-month from an inflow of Rs 3,313 crore in April. Midcap mutual funds delivered an average return of 18.77% over the past three months, outperforming all equity fund categories. However, investor inflows declined for the second straight month in May, reflecting caution over high valuations and market volatility. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Despite delivering the highest average return of approximately 18.77% over the past three months—topping all equity mutual fund categories—midcap mutual funds saw a decline in investor interest. Monthly inflows into the category fell by 15% in May, following a 4% drop in April, an analysis by ETMutualFunds expert noted that the analysis points to rising investor caution, driven by concerns over high valuations and market volatility. Despite strong gains in the mid-cap index over the past quarter, many investors seem to be booking profits or adopting a wait-and-watch approach, wary that the segment may be overheating.'This decline in inflows despite performance suggests that investors may perceive current mid-cap valuations as stretched. Heightened geopolitical uncertainties and stretched market valuations are prompting a shift in preference towards safer large-cap or hybrid categories. It may also indicate a sophistication among retail investors,' Adhil Shetty, CEO, shared with were around 22 categories in the said period, of which midcap funds ruled the return chart. Out of 29 funds in the midcap category, Invesco India Midcap Fund offered the highest return of 23.99% in the last three the same period, HSBC Midcap Fund delivered a return of 23.06%, followed by Edelweiss Mid Cap Fund with 21.06%, and Mirae Asset Midcap Fund with 20.75%.Kotak Emerging Equity Fund, the second-largest midcap fund based on assets managed, delivered a return of 19.88% in the last three months. HDFC Mid-Cap Opportunities Fund , the largest midcap fund based on assets managed, delivered a return of 17.34% in the mentioned period. SBI Magnum Midcap Fund offered the lowest return of 13.54% in the last three on the performance of midcap funds, the expert noted that given the sharp rally in midcap stocks and increasing market volatility, lump-sum investments in this segment involve higher timing risks. For long-term investors, a staggered approach through midcap SIPs (Systematic Investment Plans) or STPs (Systematic Transfer Plans) continues to be the most prudent strategy.'SIPs help average out costs over time and reduce the risk of entering at market peaks—an important consideration given that mid-caps tend to be more sensitive to market corrections. While a short-term correction may happen, trying to time the market precisely is notoriously difficult. Therefore, disciplined investing via SIPs/STPs over the next 12–18 months can help build exposure without chasing short-term highs,' Shetty further shared with May, the midcap funds received an inflow of Rs 2,808 crore, witnessing a decline of 15% on a monthly basis from an inflow of Rs 3,313 crore in April. The inflows in April were down by 4% from the inflow of Rs 3,438 crore in investors adopting a cautious approach and the category witnessing a decline in inflows for two consecutive months, Shetty shares that the outlook for mid-cap funds over the medium to long term remains constructive, especially for investors with a 5-year-plus believes that with India's economic recovery gaining momentum, earnings growth in the midcap segment is likely to remain strong, driven by structural themes such as the manufacturing push, rising domestic consumption, and a revival in capital expenditure.'However, short-term headwinds such as global interest rate uncertainty, oil prices, and election-linked volatility may trigger intermittent corrections. Valuations are above historical averages, which warrants caution. Hence, future returns may moderate from recent highs,' he should always invest based on their risk appetite, investment horizon, and goals.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and Twitter handle.
Economic Times
12-06-2025
- Business
- Economic Times
Midcap mutual funds deliver 19% return in 3 months. Check top performers
In May, the midcap funds received an inflow of Rs 2,808 crore, witnessing a decline of 15% month-on-month from an inflow of Rs 3,313 crore in April. Despite delivering the highest average return of approximately 18.77% over the past three months—topping all equity mutual fund categories—midcap mutual funds saw a decline in investor interest. Monthly inflows into the category fell by 15% in May, following a 4% drop in April, an analysis by ETMutualFunds expert noted that the analysis points to rising investor caution, driven by concerns over high valuations and market volatility. Despite strong gains in the mid-cap index over the past quarter, many investors seem to be booking profits or adopting a wait-and-watch approach, wary that the segment may be overheating.'This decline in inflows despite performance suggests that investors may perceive current mid-cap valuations as stretched. Heightened geopolitical uncertainties and stretched market valuations are prompting a shift in preference towards safer large-cap or hybrid categories. It may also indicate a sophistication among retail investors,' Adhil Shetty, CEO, shared with ETMutualFunds. Also Read | Mutual fund SIP stoppage ratio slows down to nearly 72% in May There were around 22 categories in the said period, of which midcap funds ruled the return chart. Out of 29 funds in the midcap category, Invesco India Midcap Fund offered the highest return of 23.99% in the last three months. In the same period, HSBC Midcap Fund delivered a return of 23.06%, followed by Edelweiss Mid Cap Fund with 21.06%, and Mirae Asset Midcap Fund with 20.75%.Kotak Emerging Equity Fund, the second-largest midcap fund based on assets managed, delivered a return of 19.88% in the last three months. HDFC Mid-Cap Opportunities Fund, the largest midcap fund based on assets managed, delivered a return of 17.34% in the mentioned period. SBI Magnum Midcap Fund offered the lowest return of 13.54% in the last three on the performance of midcap funds, the expert noted that given the sharp rally in midcap stocks and increasing market volatility, lump-sum investments in this segment involve higher timing risks. For long-term investors, a staggered approach through midcap SIPs (Systematic Investment Plans) or STPs (Systematic Transfer Plans) continues to be the most prudent strategy.'SIPs help average out costs over time and reduce the risk of entering at market peaks—an important consideration given that mid-caps tend to be more sensitive to market corrections. While a short-term correction may happen, trying to time the market precisely is notoriously difficult. Therefore, disciplined investing via SIPs/STPs over the next 12–18 months can help build exposure without chasing short-term highs,' Shetty further shared with May, the midcap funds received an inflow of Rs 2,808 crore, witnessing a decline of 15% on a monthly basis from an inflow of Rs 3,313 crore in April. The inflows in April were down by 4% from the inflow of Rs 3,438 crore in March. Also Read | Gold ETFs see inflows of Rs 292 crore in May after two straight months of outflows With investors adopting a cautious approach and the category witnessing a decline in inflows for two consecutive months, Shetty shares that the outlook for mid-cap funds over the medium to long term remains constructive, especially for investors with a 5-year-plus believes that with India's economic recovery gaining momentum, earnings growth in the midcap segment is likely to remain strong, driven by structural themes such as the manufacturing push, rising domestic consumption, and a revival in capital expenditure.'However, short-term headwinds such as global interest rate uncertainty, oil prices, and election-linked volatility may trigger intermittent corrections. Valuations are above historical averages, which warrants caution. Hence, future returns may moderate from recent highs,' he shared. If you are looking for recommendations, see Best mid cap mutual funds to invest in June 2025One should always invest based on their risk appetite, investment horizon, and goals. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and Twitter handle.
Economic Times
08-06-2025
- Business
- Economic Times
As deposit rates fall, banks turn to innovation to woo savers and stay competitive
With interest rates declining, banks face the challenge of attracting deposits. Experts suggest innovative products like fixed deposit-linked credit cards and sweep-in deposits are crucial. Younger savers are shifting to capital market products, while senior citizens favor government schemes. Banks are already adapting, but further rate cuts will necessitate more competitive offerings to retain depositors. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: Banks will have to innovate to get fresh deposits as lower interest rates will make it more difficult to attract new savers, said investment experts. Products such as fixed deposit-linked credit cards, sweep-in deposits and savings bank-linked home loans will have to be marketed more as younger savers will continue to move towards capital market products like short-term debt funds, while senior citizens will be increasingly more dependent on government savings schemes , said bankers and investment be sure, banks already have products such as those with a monthly sweep-in to fixed deposits, home loans which take into account surplus balance in savings accounts and credit cards backed by fixed Shetty, CEO of an online financial marketplace, said banks have already taken the initiative. "We are seeing different kinds of products and with different kinds of banks also; rates wary. Like small finance banks offer a higher rate compared to the top commercial banks," he the deeper repo rate cut and liquidity likely to be released by the 1 percentage point cash reserve ratio cut, the fall in deposit rates will quicken, Shetty one-year fixed deposit rate offered by State Bank of India is likely to decline close to 6% from the current 6.5%.Some lenders like ICICI Bank have started reducing their bulk deposit rates. Retail deposits less than ₹3 crore will also be cut in the coming week, even as banks have already passed on the cut to their retail lending rate. Bank of Baroda , for example, will announce its revised deposit rates later this week. Ashok Chandra, CEO of Punjab National Bank , said the bank has initiated calculations on the quantum of deposit rate cuts which will be announced as per schedule on June rates had fallen after the sharp rate cut in the Covid-19-affected 2020 and 2021. Bankers said while it cannot be predicted how low rates will go, it is right to say that depositors will have to live with lower rates."With repo at 5.5% and ample liquidity in the system, it is fair to assume overnight rates at 5.25% which means one-year deposit rates cannot go above 6%. Savers who want a higher rate will have to most probably park their funds in riskier assets," said Rajiv Anand, deputy managing director, Axis Bank . "With money market rates coming down, the returns on mutual fund debt investments will also adjust. So depositors will have to adjust to a lower rate environment. The bet from the central bank's perspective is people will spend more, buy homes, cars and use their credit cards which will give the economy a push."For senior citizens, who need the security of their principal and also want a higher interest rate, the senior citizen savings scheme offering 8.2% currently is an option. But the scheme has a lock-in for five years and entails withdrawal penalties if money is taken out prematurely. Post office savings currently offer 6.9% for a one-year deposit, though those rates may also be revised after the rate said debt mutual funds are a good choice for all investors since they are both tax-efficient and liquid, especially when rates are on the way down.
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Business Standard
20-05-2025
- Business
- Business Standard
Visa revokes, illness abroad: How Indian students may face loan burden
Ritu, a 24-year-old Indian student, had taken a loan of Rs 45 lakh to pursue her studies in the UK. Last month, she fell ill and flew back to India so her parents could care for her. For now, she has had to pause her education abroad. She's not alone. Across countries like the US and UK, many Indian students are grappling with similar disruptions. Some have faced deportation after visa revocations. Others dropped out due to mental health breakdowns. In most cases, these are non-fatal but life-altering setbacks that throw their financial commitments into disarray. < Lenders usually don't cancel loans, even in serious setbacks < Relief (like EMI reduction or moratorium) is given on a case-by-case basis < Supporting documents are mandatory: medical, academic, or immigration-related < Full loan waivers are rare Ankit Mehra, CEO and co-founder of GyanDhan, said Indian lenders rarely cancel education loans, even in cases of distress. "In case of a serious setback, such as illness, deportation, or academic suspension, relief is assessed on a case-by-case basis with supporting documentation from universities, hospitals, or immigration authorities. Based on individual cases, lenders offer moratorium extensions, reduce EMIs temporarily, or allow partial repayment options. However, such relief measures are exceptions, not guarantees," Mehra said. Adhil Shetty, CEO of explained that moratoriums are usually limited to specific hardship events. "Education loan repayment can be paused or renegotiated in situations like serious illness or academic suspension. Many lenders provide a deferment period during which repayments are temporarily paused. However, complete loan waivers are rarely granted. In cases like deportation, repayment is still expected, though restructuring can be requested," Shetty said. Financial and emotional impact on families The toll is not just monetary. Sonam Chandwani, managing partner at KS Legal & Associates, said both students and their families bear the brunt. "A ₹20-40 lakh unsecured education loan at 11-13% interest can balloon to ₹50 lakh or more over a decade if repayments falter. Co-borrowers, usually parents, are legally liable. With many nearing retirement, their savings can be obliterated," she said. Chandwani said secured loans put assets like property or fixed deposits at risk. "Defaulting craters credit scores, blocking future loans for emergencies. The social stigma of default in India adds to the distress, and when paired with mental health struggles or deportation, the emotional toll is immense," she added. What education loan insurance covers < Usually covers death or permanent disability of the borrower < Does not cover temporary illness, visa denial, mental health issues, or academic failure < Families often misread the extent of insurance coverage < Students advised to read exclusions carefully System is rigid, relief not assured Under the Indian Banks' Association (IBA) Model Education Loan Scheme, loans come with a moratorium period covering the course duration plus 6 to 12 months. During this time, interest accrues, pushing up the total payable amount. According to Shetty, public sector banks guided by RBI's 2019 circular may offer some leeway. Private lenders and NBFCs, however, are far less flexible. "Restructuring options like extending the loan tenure or reducing EMIs are available, but banks demand hard proof of distress and approvals are inconsistent. Early loan termination isn't permitted," Shetty said. Mehra added that while GyanDhan has not encountered cases of outright loan termination due to setbacks, they've seen lenders offer support selectively. "We strongly advise students to maintain timely communication and keep documentation ready. Relief options like restructuring or forbearance require exceptional approvals from senior management," he said. Gaps in the loan system < Moratorium covers course duration + 6–12 months; interest accrues < No early termination of loan even if student drops out or is deported < Public banks may allow restructuring; private lenders often rigid < Documentation needed for relief: deportation proof, medical reports < Relief approvals often inconsistent and slow Outdated risk models and lack of insurance coverage Lenders typically assess default risk using the course type, university reputation, and co-borrower's income or collateral, based on RBI's 2016 guidelines. These models don't account for visa revocations or mental health issues. Chandwani said visa revocation is particularly crushing. "It cuts off access to high-wage foreign jobs, and India's ₹5-10 lakh annual salaries can't cover hefty EMIs. The loan system assumes a straight path to graduation and high-paying employment. It's blind to disruptions like immigration rules or illness," she said. She cited an example of a student deported after taking a ₹25 lakh loan. Back in India, he finds a ₹6 lakh job, with a monthly EMI of ₹30,000. "After 90 days of missed payments, the loan is marked as non-performing under RBI's 2018 norms, triggering recovery efforts, including legal notices or asset seizure. Families get trapped in a cycle of debt and despair," she said. Is student insurance the answer? Insurance, too, has its limits. Meet Kapadia, head of travel insurance at said foreign university insurance plans often carry exclusions. "A well-structured student insurance plan usually covers medical treatment, hospitalisation, emergency evacuation, accidental death, and travel-related issues. But many plans exclude coverage for academic failures, mental health, or deportation," Kapadia said. Many students buy supplementary insurance in India, which is more comprehensive. "Indian policies often cover pre-existing conditions, medical emergencies, personal liability, trip cancellations, and loss of documents," he added. But this doesn't solve everything. Shetty said families should be wary of overestimating what education loan insurance covers. "These policies typically cover death or permanent disability, but not temporary illness, visa issues, or academic problems unless specifically mentioned. Families must go through policy documents in detail," he said. Mehra said most lenders require students to take out loan insurance for the full loan amount. "These usually cover death or permanent disability, but in other cases, repayment responsibility falls back on the family," he said. No standard relief policy, slow grievance redressal While RBI's 2021 Banking Ombudsman Scheme allows borrowers to file complaints, relief is not always forthcoming. Chandwani said banks rarely have consistent internal policies. "Some public banks offer ad-hoc concessions, but private lenders often stonewall. Grievance redressal processes are slow, bureaucratic, and rarely offer meaningful relief," she said. She called for structural reform. "The system needs mandated loan insurance, automatic repayment pauses during crises, and coordination with mental health services. Without it, families continue to bear the burden for events beyond their control." The gap is wide. And for students like Ritu, the consequences are immediate, personal, and deeply tied to a financial system that expects the best-case scenario—even when the world has other plans. Automatic repayment pause during verified crises
Time of India
20-05-2025
- Business
- Time of India
Over 260 debt mutual funds beat fixed deposits rate in 2 years. Should you switch?
With SBI cutting FD rates by 20 bps and over 260 debt mutual funds outperforming them, many experts believe debt funds now offer a more attractive, tax-efficient option for low-risk investors seeking better returns than FDs. In the current market scenario, short-duration funds, medium-duration funds, dynamic bond funds, and gilt funds can be good investment options with different horizons. 'In the current environment, short-duration funds and medium-duration funds are ideal for those with investment horizons of 1–3 years and 3–5 years, respectively. Dynamic bond funds are also suitable for those who want fund managers to actively manage duration based on changing interest rates. For risk-averse investors, gilt funds, which invest in government securities, can be a good alternative, offering safety with potential for capital gains if interest rates decline further, said Adhil Shetty, CEO of Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Don't Miss The Top Packaging Trends Of 2024, Enhnace Your Brand With The Latest Insights Packaging Machines | Search Ads Search Now Undo Also Read | Sensex @82,300: Should mutual fund investors alter their investment strategy? State Bank of India (SBI) has cut its fixed deposit (FD) interest rates for both the general public and senior citizens, effective May 16, 2025. According to the website, SBI has reduced FD rates by 20 basis points (bps) across all tenors. The latest FD rate cut comes just a month after the cut announced on April 15. Live Events The interest rate applicable for a tenure of 2 years to less than 3 years is reduced to 6.7% against 6.9% before. ETMutualFunds analysed the two-year performance of all debt mutual fund categories alongside the interest rates on fixed deposits offered by SBI, India's largest public sector bank, in the same period. Around 264 debt mutual funds outperformed the bank deposit rate of 6.7% offered by SBI over the past two years. Four schemes gave double-digit returns, of which the top three performers were from the credit risk fund category. DSP Credit Risk Fund delivered the highest return of 18.7% over the last two years, followed by HSBC Credit Risk Fund and Aditya Birla SL Credit Risk Fund, which provided 13.8% and 12% returns, respectively, during the same period. Aditya Birla SL Medium Term Plan delivered a return of 10.4%, followed by Axis Gilt Fund and Axis Floater Fund, which gave 9.6% and 9.5% respectively in the same period. Motilal Oswal Liquid Fund was the last one to offer a 6.8% return in the said period. Also Read | Railways PSU ETF delivers 16% in a week. Is this the right opportunity for portfolio diversification? After the outperformance by debt mutual funds, the expert recommends that a prudent strategy is to match the fund category with your investment horizon, a laddering strategy, where you invest across different maturities, can help manage reinvestment risk and interest rate fluctuations and starting a Systematic Investment Plan (SIP) can also help average out costs and reduce the impact of market volatility. 'A prudent strategy is to match the fund category with your investment horizon. For example, use short-duration funds for up to 3 years and medium-duration or dynamic bond funds for longer terms. A laddering strategy, where you invest across different maturities, can help manage reinvestment risk and interest rate fluctuations,' Shetty said. He further advices that starting a Systematic Investment Plan (SIP) can also help average out costs, reduce the impact of market volatility and investors should focus on funds with high credit quality, avoiding those heavily exposed to lower-rated instruments. With the RBI MPC meeting scheduled for next month, it's worth noting that the central bank has cut the repo rate by 25 basis points in each of the last two meetings, following a prolonged pause at 6.5% across 11 consecutive meetings. The expert mentions that it's also important to monitor the interest rate cycle, if further rate cuts are expected, longer-duration funds may deliver capital appreciation and lastly, one should understand the exit load and taxation rules; debt funds held for over 3 years earlier benefited from indexation, but recent changes to tax rules mean post-tax returns should be carefully evaluated. Finance Minister Nirmala Sitharaman in the last Budget made no change for the debt mutual funds, which continued to be taxed as per the tax slab. Underperformers Around 40 debt mutual funds have failed to beat the fixed deposit interest rate offered by SBI. These funds gave returns ranging between 6% to 6.7% in the said period. Bank of India Credit Risk Fund gave 6.1% and Motilal Oswal Ultra Short Term Fund gave the lowest return of 6% in the mentioned time period. Also Read | BSE and Adani Enterprises among stocks that HDFC Mutual Fund bought and sold in April FD vs debt funds Now coming to the comparison between fixed deposits and debt mutual funds, fixed deposits are considered low-risk investments as they offer a guaranteed return for the predetermined period whereas debt mutual funds have a slightly higher risk associated with them because of the interest rate movement. The second point of difference comes on the taxation part. The investment in tax-saving fixed deposits is exempted under Section 80C of the Income Tax Act whereas for the debt mutual funds there is no such exemptions. But both fixed deposits and debt mutual funds are classified under the same asset class. As the fixed deposits offer lower interest rates compared to debt mutual funds, Shetty recommends that investors in the higher tax brackets benefit the most from switching to debt mutual funds, as traditional FD interest is fully taxable as per slab, while mutual funds—although recently taxed differently—still offer relatively efficient returns in some cases. He adds that savers seeking better liquidity and flexibility than FDs can also consider debt mutual funds, as they generally offer quicker redemption with lower penalties and retired individuals and conservative investors, who are looking for stable income but are open to a little market-linked risk, can shift partially to safe options like gilt or banking & PSU funds. 'Importantly, those with a long-term outlook and an understanding of interest rate movements can strategically allocate to longer-duration or dynamic bond funds for potentially higher returns. However, this shift should be made keeping in mind the risks associated with NAV fluctuations, especially in a volatile rate environment,' he said. We considered all debt categories such as gilt fund, long duration, medium to long duration, gilt fund - constant maturity 10 year, credit risk funds, liquid funds , money market funds, overnight funds, corporate bond fund, dynamic bond fund, floating rate bond, banking and PSU funds, medium duration, low duration, short duration funds. We excluded debt based target maturity funds. We considered regular and growth options. We calculated returns for the last two years. We calculated CAGR returns as in debt mutual funds, returns up to one year are annualised, and returns above one year are CAGR. Note, one should not make investment or redemption decisions based on the above exercise. One should always consider risk profile, investment horizon and goal before making investment decisions. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and Twitter handle.
