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Looking for a Product that Yields Higher than a Savings Bank Account?
February 28, 2012

We recognize that there are investors or savers who are looking for products that can provide a better yield or return than bank deposits and savings account, while still having relatively low or moderate risk level. Many investors are willing to live with a little volatility, in return for higher returns. This is particularly true if the investors have medium term time horizon or longer.

Author : iFAST Research Team

Untitled Document

DWS Ultra Short Term Fund

Ultra Short Term Mutual Fund is the simplest and lowest risk fund that carries. Presently, the returns are better than the bank savings account rate @4%, with the yield being accrued daily but these funds have limited volatility albeit no downside risk so far. Thus, Ultra Short Term Funds provide a very good alternative as they provide better post tax returns and liquidity.

This fund is suitable for investors who are seeking low risk alternatives to bank savings and fixed deposits, and who are willing to withstand a small volatility in the fund in normal times. Savers and investors who have time horizon of 3 months or more will find this fund to be suitable and attractive.

Table 1: Net Yield to Maturity of DWS Ultra Short Term Fund

Fund Name

Yield-To-Maturity (as at 31 August 2012)

Net Yield-To-Maturity (as at 31 August 2012)

Expense Ratio (as at 26 December 2011)

DWS Ultra Short Term





Note: Yield-To-Maturity (Weighted Gross Yields to Maturity provided by fund houses less management fees) and Net Yield-To-Maturity (Weighted Gross Yields to Maturity provided by fund houses less latest expense ratio)


Comparison of DWS Ultra Short Term Fund and Savings account

Chart 1 compares the returns generated from savings account deposit which yields @ 4.0% p.a. and DWS Ultra Short Term Fund for a time horizon of seven years. Due to the power of compounding, the difference in the return is striking.

The amount of INR 10,000 placed into DWS Ultra Short Term Fund (DWS UST) seven years ago, the value would now be worth INR 17,724; the same amount in savings accounts would only be worth INR 13,917.

In fact, the returns from DWS Ultra Short Term (INR 7724) are more than double the returns gained from savings account (INR 3917) over a period of time.

In conclusion, investors should review the money they hold in savings accounts The investor today, should have second thoughts before going forward to deposit his money in the savings account as there are alternatives out there which may entail slightly higher risk, but promise better returns.


source: iFAST Compilations

Disclaimer: iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's scheme information document including statement of additional information. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer on the website. Risk Factors: Mutual funds, like securities investments, are subject to market risks and there is no guarantee against loss in the Scheme or that the Scheme’s objectives will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on various factors and forces affecting capital markets. Past performance of the Sponsor/the AMC/the Mutual Fund does not indicate the future performance of the Scheme. The name of the Scheme does not in any manner indicate the quality of the Scheme, its future prospects or returns. Please read the Statement of Additional Information and Scheme Information Document carefully before investing.

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