What is Debt Fund?

This type of mutual that invests in short-term government securities, certificates of deposit and other highly liquid securities such as treasury bills and short-term commercial paper.

Debt is a fund raising by the private company. Investor can trust with issuing company and buy the Debt which is giving high risk and high interest.

Bond is also a fund raising by the Government, large company with secured which is giving less risk and less interest.

Debt Fund Types

Overnight Fund

Investment in overnight securities having maturity of 1 day.

Liquid Fund

Investment in Debt and money market securities with maturity of upto 91 days only.

Ultra Short Duration Fund

Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 3 months – 6 months.

Low Duration Fund

Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 6 months- 12 months.

Money Market Fund

Investment in Money Market instruments having maturity up to 1 year.

Short Duration Fund

Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 1 year – 3 years.

Medium Duration Fund

Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 3 years – 4 years. Portfolio Macaulay duration under anticipated adverse situation is 1 year to 4 years.

Medium to Long Duration Fund

Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 4 – 7 years. Portfolio Macaulay duration under anticipated adverse situation is 1 year to 7 years.

Long Duration Fund

Investment in Debt & Money Market Instruments such that the Macaulay duration of the portfolio is greater than 7 years.

Dynamic Bond

Investment across duration.

Corporate Bond Fund

Minimum investment in corporate bonds- 80% of total assets (only in AA+ and above rated corporate bonds).

Credit Risk Fund

Minimum investment in corporate bonds- 65% of total assets (only in AA* and below rated corporate bonds).

Banking and PSU Fund

Minimum investment in Debt instruments of banks, Public Sector Undertakings, Public Financial Institutions and Municipal Bonds – 80% of total assets.

Gilt Fund

Minimum investment in Gsecs- 80% of total assets (across maturity).

Gilt Fund with 10 year constant duration

Minimum investment in Gsecs- 80% of total assets such that the Macaulay duration of the portfolio is equal to 10 years.

Floater Fund

Minimum investment in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives)- 65% of total assets.

Conclusion

These type of fund are less risk and less return than Equity fund. If you are new investor, first try with Liquid fund which is low risk for principal investment.


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