While we all know that ChatGPT is an AI Chatbot tool which can provide answers to almost everything. It also provides tips on mutual funds investing. I asked ChatGPT to provide the list of debt mutual funds to invest in 2023 by low risk, moderate risk and high risk investors. As usual it gave different responses and finally responded with an answer I was looking for. In this article we would detail on some of the Best Debt Mutual Funds to invest in 2023 in India as per ChatGPT. We would also provide the past performance for the past 1 year to 10 years for these ChatGPT recommended Debt Mutual Funds List.
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What is the ChatGPT response on โBest Debt Mutual funds to invest in 2023โ?
ChatGPT says, ย โAs an AI language model, I don’t have access to real-time data or the ability to provide personalized financial advice. The performance of mutual funds can vary based on various factors, including market conditions, investment goals, risk tolerance, and individual preferences. It’s always recommended to consult with a financial advisor or conduct thorough research before making any investment decisionsโ and it continued with list of debt funds.
What factors should be considered as per ChatGPTย for debt funds?
When choosing debt mutual funds, here are some factors to consider:
Investment Objective: Determine your investment objective, whether it’s capital preservation, regular income generation, or a combination of both. Different debt funds have varying objectives, such as liquid funds for short-term liquidity needs or income funds for generating regular income.
Credit Quality: Assess the credit quality of the underlying securities in the fund’s portfolio. Debt instruments are assigned credit ratings by rating agencies. Higher-rated securities generally carry lower default risk but offer lower yields, while lower-rated securities carry higher default risk but offer higher yields. Choose funds with a credit quality that aligns with your risk tolerance.
Interest Rate Risk: Understand the fund’s sensitivity to interest rate changes. Longer-duration funds are more sensitive to interest rate fluctuations compared to shorter-duration funds. If you expect interest rates to rise, shorter-duration funds may be more suitable.
Expense Ratio: Consider the expense ratio of the fund, which includes management fees and other operational expenses. Lower expense ratios can have a positive impact on your overall returns.
Fund Manager Expertise: Evaluate the track record and experience of the fund manager. Look for consistency in performance over different market cycles and their ability to navigate challenging market conditions.
Fund Size and Liquidity: Larger funds often have better liquidity, which can be advantageous during redemption requests. It’s important to ensure that the fund’s size is appropriate and that it can accommodate your investment amount.
Historical Performance: While past performance is not a guarantee of future results, reviewing a fund’s historical performance can provide insights into its consistency and ability to deliver returns.
Exit Load: Check the exit load structure of the fund. Exit loads are fees charged when you redeem your investment within a specified period. Consider funds with lower or no exit loads if you anticipate needing to access your funds in the short term.
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ChatGPT Recommended Debt Mutual Funds List to invest in 2023
Here is the list of debt mutual funds recommended by ChatGPT to invest in 2023 in India based on risk appetite. Whoever has the doubt whether these responses are provided by ChatGPT are not can check the link of screenshots (question and response in Screenshot-1 and Screenshot-2).
A) Low Risk Investors
For low risk investors, ChatGPT recommends liquid funds and ultra short duration funds.
Liquid mutual funds are suitable for parking funds for short term with a low risk appetite. These have zero risk. There are 3 liquid mutual recommendations from ChatGPT. We have provided the past performance in the last 1 to 10 years.
| Scheme Name | 1Y | 3Y | 5Y | 10Y |
|---|---|---|---|---|
| Aditya Birla Sun Life Liquid Fund | 6.4% | 4.5% | 5.4% | 6.8% |
| HDFC Liquid Fund | 6.3% | 4.3% | 5.3% | 6.7% |
| ICICI Prudential Liquid Fund | 6.3% | 4.4% | 5.3% | 6.7% |
Ultra Short Duration mutual funds are suitable for short term investment horizon. These can be invested for 6 months to 1 year time frame. ChatGPT recommends 3 ultra short term mutual fund recommendations. Lets see the performance in the last 1 year to 10 years too.
| Scheme Name | 1Y | 3Y | 5Y | 10Y |
|---|---|---|---|---|
| SBI Magnum Ultra Short Duration Fund | 6.4% | 4.7% | 6.1% | 7.1% |
| Nippon India Ultra Short Duration Fund | 6.9% | 6.9% | 6.0% | 7.1% |
| Axis Ultra Short Term Fund | 6.8% | 5.2% | – | – |
B) Moderate Risk Investors
For moderate risk investors, ChatGPT recommends Short Duration Funds and Corporate Bond funds.
Short duration funds primarily invest in fixed income securities with relatively short durations. These funds typically invest in debt instruments such as government bonds, corporate bonds, and money market instruments that have a maturity ranging from 1 to 3 years. There are three short duration mutual recommendations here, and we have provided the past performance in the last 1 to 10 years.
| Scheme Name | 1Y | 3Y | 5Y | 10Y |
|---|---|---|---|---|
| Aditya Birla Sun Life Short Term Fund | 7.5% | 7.1% | 7.9% | 8.6% |
| HDFC Short Term Debt Fund | 7.2% | 6.2% | 7.6% | 8.0% |
| ICICI Prudential Short Term Fund | 8.4% | 6.8% | 8.1% | 8.4% |
Corporate bond funds pool money from investors and invest in a diversified portfolio of corporate bonds with varying maturities and credit ratings.ย There are 2 corporate mutual fund recommendations here, and we have provided the past performance in the last 1 to 10 years.
| Scheme Name | 1Y | 3Y | 5Y | 10Y |
|---|---|---|---|---|
| Bandhan Corporate Bond Fund | 6.3% | 5.5% | 7.1% | – |
| Kotak Corporate Bond Fund | 6.8% | 5.8% | 7.3% | 7.7% |
C) High Risk Investors
For high risk takers, ChatGPT recommends Dynamic Bond Funds and Credit Risk Funds.
Dynamic bond funds have the flexibility to invest across different maturities and fixed income securities based on the fund manager’s assessment of interest rate movements and market conditions. There are 2 dynamic bond fund recommendations here, and we have provided the past performance in the last 1 to 10 years. Note that ICICI Pru Long Term Debt Fund is long term debt fund and not dynamic bond fund. May be ChatGPT mis-understood this.
| Scheme Name | 1Y | 3Y | 5Y | 10Y |
|---|---|---|---|---|
| ICICI Prudential Long Term Debt Fund | 10.0% | 3.0% | 7.0% | 7.0% |
| SBI Dynamic Bond Fund | 9.8% | 5.4% | 8.4% | 7.9% |
Credit risk funds are a category of debt mutual funds that primarily invest in lower-rated corporate bonds or debt securities. These funds aim to generate higher returns by taking on higher credit risk compared to other debt fund categories. There are 3 credit risk mutual fund recommendations here, and we have provided the past performance in the last 1 to 10 years. Personally, I would like to avoid credit risk funds owing to high fluctuations in NAV month on month and the risk involved in these funds.
| Scheme Name | 1Y | 3Y | 5Y | 10Y |
|---|---|---|---|---|
| Kotak Credit Risk Fund | 6.3% | 6.1% | 6.8% | 8.1% |
| Aditya Birla Credit Risk Fund | 9.5% | 8.3% | 6.5% | 7.3% |
| HDFC Credit Risk Debt Fund | 7.4% | 8.2% | 8.1% | – |
Also Read: How to create Rs 100 Crores with 50,000 SIP in mutual funds?
Can ChatGPT change the list of recommended debt mutual funds?
It can change and at any time.
When you type in ChatGPT you would get different variety of responses. No wonder you might get a different response too from what I indicated above. Such mutual fund recommendations can change in the future too.
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Actually
To avoid risk, diversify your investments among various mutual funds.
Before choosing a mutual fund, consider your investment objectives and time horizon.
Investigate and contrast mutual fund performance in the past.
To maximize your returns, look for funds with low expense ratios.
Consider the fund manager’s track record and experience.
Review and rebalance your mutual fund portfolio on a regular basis.