Types of debt mutual funds

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types of debt mutual funds


Types of debt mutual funds


There are several types of debt mutual funds, each with its own investment objective and risk profile. Here are some of the most common types of debt mutual funds:

  1. Liquid Funds: These funds invest in short-term debt instruments such as treasury bills, commercial papers, and certificates of deposit. They aim to provide liquidity and safety of capital to investors.
  2. Ultra Short Duration Funds: These funds invest in debt instruments with a slightly longer maturity period than liquid funds, typically up to one year. They aim to provide higher returns than liquid funds while maintaining a low level of risk.
  3. Short Duration Funds: These funds invest in debt instruments with a maturity period of one to three years. They aim to provide a higher return than ultra-short duration funds while maintaining a moderate level of risk.
  4. Medium Duration Funds: These funds invest in debt instruments with a maturity period of three to four years. They aim to provide higher returns than short-duration funds, but with a slightly higher level of risk.
  5. Corporate Bond Funds: These funds invest in debt instruments issued by corporations. They aim to provide higher returns than government securities, but with a higher level of risk.
  6. Credit Risk Funds: These funds invest in lower-rated debt instruments that offer a higher yield. They aim to provide higher returns than other debt funds, but with a higher level of risk.
  7. Gilt Funds: These funds invest in government securities, which are considered to be the safest debt instruments. They aim to provide stable returns with a low level of risk.
  8. Dynamic Bond Funds: These funds invest in a mix of government securities and corporate bonds, and the fund manager has the flexibility to change the allocation based on the prevailing interest rates and credit conditions. They aim to provide higher returns than other debt funds by actively managing the portfolio.
  9. Fixed Maturity Plans (FMPs): These funds invest in debt instruments with a specific maturity date, usually ranging from one to five years. They aim to provide predictable returns with a low level of risk.
  10. Target Maturity Funds: These are passively managed debt mutual funds that come with a specified maturity date and replicate the underlying index. Similar to FDs, Target maturity indices have a pre-defined maturity date.

The investments mature closer to this date, and your money gets credited back to your bank account post-maturity.

Investors should choose a debt mutual fund based on their investment objective, risk appetite, and investment horizon. It is advisable to consult with a financial advisor before making any investment decisions.

For more detail, you can feel free to contact us
+91 93997 98706
services@finvestree.com
www.finvestree.com

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