How to invest in mutual funds?
What are the different types of Debt and Balanced Mutual Funds?
In the earlier article, you read about the different types of Equity and Solution-Oriented MFs. In this one, we will discuss about the different types of Debt and Balanced Mutual Funds.
Debt Funds:
These Mutual Funds invest mainly in Debt instruments like Bonds i.e. where the returns are not dependent on any company performance. However, since they essentially provide loans to different entities, they do run the risk of defaults. Debt Funds differ based on whom they loan money to and for how long.
When investing in Debt Funds, you need to remember that
- Data available to Advisors for research is usually inadequate. This may lead to an improper analysis of Debt and Debt-related securities. Most Investment Advisors, therefore, are not able to give an opinion on Debt securities.
- Corporate Bonds in India tend to be illiquid, as they aren’t traded in the secondary market very regularly, and hence, add liquidity risk to the portfolio. Moreover, they tend to have a lower credit rating, adding credit risk to a portfolio
...........Read More
Comments:
© All rights reserved. No part of this book may be reproduced or modified in any form, including photocopying, recording, or by any information storage and retrieval system, or in any digital or electronic format without permission in writing from the Publisher or Author.
Comment Your Thoughts: