ALL >> Investing---Finance >> View Article
What Are The Types Of Mutual Funds? 7 Types Of Debt Funds Explained!
The SEBI managed mutual funds are where a bunch of investors pool in the capital that eventually gets invested in asset classes like bonds, shares, and other money market instruments. There is a mutual fund investment for every kind of investor. Some of the common ones are:
1) Equity funds: They primarily focus on equities like stocks or shares. Equity funds are considered high-risk funds since they deliver greater returns. Short-term goal investors can opt for such funds
2) Debt funds: Such funds focus on debt instruments like Government bonds, company debentures, and fixed income assets. Debt funds provide fixed returns and are ideal for low-risk investors. These funds are further classified as liquid funds, gilt funds, etc.
3) Hybrid funds: They look to maintain a diverse portfolio. Here the proportion between debt and equity can vary. So, the returns and risk strike a perfect balance
This article focuses more on different types of debt mutual funds as they are relatively a safe investment instrument for risk ...
... averse people:
1) Liquid funds: It is an open-ended scheme that invests in both debt and money market securities. Liquid funds come with a maturity period of 91 days. Those who want quick returns with the least amount of risk should opt for liquid funds. In fact, these funds give higher returns than a savings account but follow a similar concept of fixed deposits.
2) Gilt funds: what are gilt funds? They are funds which invest at least 80 per cent of their assets in Government securities across maturities. It carries no credit risk. However, they carry a high amount of interest risk.
3) Overnight funds: These are open-ended debt funds that invest in overnight securities with a maturity of one day. It carries minimal interest rate fluctuation and credit default risk.
4) Money market funds: Such funds invest in money market instruments that carry a maturity period of one year. Money market funds offer relatively low-risk and high liquidity.
5) Short duration fund: The assets belong to debt and money market instruments with Macaulay Duration between 1 to 3 years. Since the maturity period is less, short duration funds offer lower returns and carry low-risk levels.
6) Medium duration fund: The Macaulay Duration of such funds is between 3 to 4 years. They primarily invest in debt and money market instruments.
7) Long duration fund: The Macaulay Duration for such funds is over 7 years, and their assets are towards debt as well as other money market instruments.
Be it liquid funds or gilt funds; before choosing a debt fund scheme, it is imperative to understand your financial needs and goals.
Add Comment
Investing / Finance Articles
1. What Is The Difference Between A Coin And A Token?Author: Kezex
2. Berger Cpa: An Accountancy Firm You Can Trust For Professional And Profitable Taxation Services In New Jersey And Manhattan
Author: HubraSEO
3. What Does Dapp Crypto Stand For
Author: Kezex
4. A Step-by-step Guide To Choosing The Right Fundraising Consultant
Author: Aleksey Krylov
5. Visitorscoverage Wins Gold 2024 Titan Business Awards
Author: Orson Amiri
6. Mastering Investments: Your Guide To Using The Net Present Value Calculator
Author: Atul Kumar
7. Trailing Stop, Take Profit, Or Trailing Take Profit – Which Order Type Is Better?
Author: Growlonix
8. Prop Firm "rishardbell" Launches Innovative Forex Trader Recruitment Program
Author: Orson Amiri
9. Optimizing Your Profits In The Forex Market With spectra Global Success
Author: Spectra Global
10. Buy Bitcoin In Dubai: A Complete Guide
Author: cryptodubaiotc
11. Navigating Grants In South Africa For Businesses & Citizens
Author: Gerald KN
12. "your Guide To Mortgages In The Uae: Navigating Homeownership Simply"
Author: Elite capital
13. What Is A Grid Trading Strategy And How A Grid Trading Bot Perform?
Author: Growlonix
14. How To Make A Secured Financial Future With Estate Planning In Perth
Author: Daniel Stewart
15. Blockchain Explained: What Are Blockchain Tokens
Author: Kezex