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How to Pick Mutual Funds That Beat the Market

  Smart Strategies for Investing in Mutual Funds: A Guide to Maximising Your Returns One of the most well-liked investing options for people looking for expert management and diversification without having to choose individual equities is a mutual fund. One of the easiest ways for people to accumulate wealth over time is through mutual fund investments. Mutual funds combine the capital of numerous individuals to invest in a diverse portfolio of stocks, bonds, and other securities, in contrast to direct stock market investing, which necessitates considerable time, study, and risk tolerance. Mutual funds are a well-liked option for both new and experienced investors due to their expert management and diversification. But merely investing in a mutual fund and crossing your fingers seldom yields the best outcomes. A comprehensive approach that matches the appropriate fund selection and management strategies with your financial objectives, risk tolerance, and investment timeline is nece...

How do bond funds work or debt mutual funds work

A debt fund is also a type of mutual fund that generates returns from money received from its investors after investing in various types of government and non-government bonds or deposits. All this basically means that they borrow money and earn interest on the money they lend. This interest that they earn forms the basic basis of the returns they generate for the investors.   A bond is like a certificate of deposit money that is issued by the borrower to the lender. Even ordinary individual investors do something similar when they do something as simple as a bank fixed deposit in a bank. When you make a bank fixed deposit with a bank, you fund the bank basically. You can also buy bonds directly, for example, tax-exempt bonds under the Income Tax Act issued by various companies such as REC and Hudco.   Exactly what debt funds actually do, except for some differences. First, those who are able to invest in many types of bonds that are not available to the general public. For ex...

Types of debt funds based on their maturity period category

  It is easier to classify debt funds than equity funds. A debt fund investment is like investing in a bond; it is defined by two characteristics, first, its maturity and seconds its credit rating. Maturity is a simple concept that will help you learn how debt funds work. The maturity date of a bond is the date on which the original value of a bond is determined to be fully returned to the investor.   Debt funds are classified into the following categories, based on their maturity.   Overnight Fund: It invests in overnight securities with a maturity of 1 day.   Liquid Fund: Liquid debt funds invest in debt and money market securities with a maturity period of only 91 days.   Ultra Short Duration Fund: Ultra short term debt mutual funds invests in debt and money market instruments, and the portfolio's maturity period is between 3 months to 6 months.   Low Duration Fund: It invests in debt and money market instruments and the portfolio...

What the Best Two Most Important Parameters While Selecting Debt Fund Pros Do (and You Should Too)

  If you are looking to invest in a mutual fund for a short term goal which is less than 5 years away, what kind of debt fund would you choose? The simple answer to the above question is to follow our recommendations and you are done. But to be fully confident about your selection of fund it is better that you know what the 2 most important criteria is when it comes to selecting debt schemes.   Two important parameters for choosing the right category of debt funds are – AVERAGE MATURITY & MODIFIED DURATION   1. AVERAGE MATURITY   The average maturity of a debt mutual fund indicates the tenure or the time to maturity of all the assets held by the mutual fund. A debt mutual fund invests in various fixed income instruments such as government bonds, corporate papers, CDs, etc. each of these instruments has its own maturity date.   The average maturity does not indicate when the scheme matures. Open-ended schemes do not mature.   Higher t...