SBI Regular Savings Fund

This is an excellent fund to be in, not only because of returns, but also because of safety. The one year returns from the fund is close to 9.67 per cent, while the three year returns is close to 9.63 per cent.

Now, this is much better than what banks are offering to investors. The higher returns from the fund have come due to a very balanced approach of investing in both government securities and also high quality debt from the private sector.

SBI Regular Savings Fund has exposure to debentures of Aditya Birla Retail, Repco Home Finance and also 8.75% Muthoot Finance 2020 debentures. Overall, returns and risk is pretty much balanced.

UTI Gilt Advantage Long Term Plan

This is an extremely safe debt fund, given that almost all of the amount is parked in government securities. The fund has generated a return of 8.91 per cent in the last one year and nearly 10.44 per cent in the last three years. This is very much in line with what bank deposits are offering.

The expense ratio of the fund is very low at just 0.85 per cent, which is a big positive.

One cannot expect too much of returns from this fund, as the returns would generally be on the basis of how interest rates in the economy move, given the exposure to government debt. The minimum investment under the plan is Rs 1,000. Check daily mutual fun gainers here

Birla Sun Life Treasury Optimizer Fund - Regular Plan

The one-year returns from this fund has not been great at only 6.63 per cent. However, on a more long term basis like three years, the fund has generated a return of close to 9.35 per cent.

The fund has exposure to the likes of ONGC (structured obligations), Power Finance Corporation (bonds), Indiabulls Housing Finance (Bonds), Bajaj Finance (debentures), HDFC (debentures).

Almost all of the bonds and debentures being held by the company have a good rating of AAA. Opt for the dividend quarterly plan, given that dividend from mutual funds upto Rs 10 lakhs is free from income tax. The Dividend plan NAV is Rs 104.926. Check all recent dividends from mutual funds here

ICICI Prudential Advisor Series - Dynamic Accrual Plan

This fund has given a very good three year returns of close to 10 per cent. However, in the more shorter term period of 1-year the returns is just about 7.37, which is not the very best. The dividend plan has an NAV of Rs 26.89.

The minimum investment under the plan is Rs 5,000.

Taxation on mutual funds

If you seek dividends, under the plan they are tax free to a sum of Rs 10 lakhs. For small investors, this means that the dividend distribution plan is the best. If you choose the growth option there will be a capital gains tax that you have to pay.