Debt funds are mutual funds that primarily invest in debt related instruments and fixed income securities. The investment objective of debt funds is to provide stable income and capital security to its investors. Out of its total assets, a debt fund allocates the majority of its portfolio to corporate bonds, government-backed securities, commercial papers, certificates of deposit, reverse repo, cash and cash equivalents, company fixed deposits, etc.
Types of Debt Mutual Funds
here are some
debt mutual fund Schemes that investors can add to their mutual fund portfolio for diversification:
liquid fund Liquid Fund is an open-ended mutual fund scheme that invests in coming fixed income securities with a maturity period of up to 91 days. The objective of Liquid Funds is to generate capital appreciation by investing primarily in debt and debt related instruments.
dynamic bond fund Dynamic is an open ended debt fund scheme that aims to generate optimum returns while maintaining liquidity through proactive management of a portfolio of debt and money market instruments.
Corporate Bond Fund – Corporate Bond Fund is an open ended debt scheme that invests a minimum of 80 per cent of its total assets in corporate bonds.
Ultra Short Duration Fund Ultra Short Duration Fund is an open-ended slow duration mutual fund scheme that invests in money market instruments with Macaulay tenors between 3 months to 6 months.
short term fund Low Duration Fund is an open ended mutual fund scheme that invests in debt and money market instruments in such a way that the Macaulay tenure of the portfolio is between 6 months to 12 months.
overnight fund Overnight Debt Funds are known to carry low interest risk as they invest in securities that have a maturity of just one day. These funds are usually considered by investors as an emergency fund or medical fund. The objective of overnight fund is to increase capital by investing in overnight securities.
money market fund A money market fund is a debt fund sub category that aims to earn capital appreciation by investing in liquid instruments such as commercial paper, high credit rating debt-based securities, Treasury bills, cash and cash equivalent securities.
short term fund Short Duration Fund is an open ended debt scheme that invests in marketable securities with Macaulay tenors between 1 to 3 years.
medium term fund It is an open ended short term debt scheme that invests in debt and debt related instruments with Macaulay tenors between 3 to 4 years.
medium to long term fund Medium Duration Fund is an open-ended debt fund that invests in debt securities with a tenure of between 3 to 4 years.
long term fund – Out of its total assets, a long-term fund should invest in debt and money market instruments, such as mutual fund portfolios with a Macaulay tenure of more than 7 years.
Gilt Fund – Gilt fund is a type of debt fund that should invest 80 per cent of the total assets in government securities in such a way that the Macaulay tenure of the mutual fund portfolio is equal to 10 years.
floater fund Floater Fund is a debt mutual fund that aims to generate capital appreciation by investing a minimum of 65 percent of its total assets in floating rate debt instruments.
credit risk fund The Credit Risk Fund aims to outperform its underlying benchmark by investing a minimum of 65 per cent of its total assets in corporate bonds. However, there is no guarantee that the fund will achieve its investment objective.
Banking and PSU Funds Out of the total assets, a banking and PSU fund should invest at least 80 per cent in debt instruments of banks, public sector undertakings and public financial institutions. It is an open ended scheme which is available to all types of investors.
are here debt mutual fund Offered by Axis Mutual Fund which can be ideal for short term investments
Axis Ultra Short Term Fund – An open-ended ultra-short term debt scheme invests in such instruments having Macaulay tenure between 3 to 6 months.
investment objective
The investment objective of the scheme is to generate regular income and capital growth by investing in a portfolio of short-term debt and money market instruments with relatively low interest rate risk such that the Macaulay tenure of the portfolio is between 3 to 6 months.
Axis Floater Fund – (An open ended debt scheme invests primarily in floating rate instruments. Relatively high interest rate risk and moderate credit risk.)
investment objective
To generate regular income through investments in a portfolio that mainly consists of floating rate instruments and fixed rate instruments swapped for floating rate returns. The scheme can also invest a part of its net worth in fixed rate debt and money market instruments. However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved.
Axis Corporate Debt Fund – (An open-ended debt scheme primarily investing in corporate bonds of AA+ and above. Relatively high interest rate risk and moderate credit risk)
investment objective
The scheme seeks to provide steady income and capital growth by investing in corporate debt. There is no assurance or guarantee that the objectives of the Plan will be met.
Axis Treasury Advantage Fund
(An open-ended low duration debt scheme invests in such instruments such that the Macaulay duration of the portfolio is between 6 and 12 months. Relatively high interest rate risk and moderate credit risk.)
investment objective
The objective of the investment is to provide investors with optimal returns and liquidity by investing primarily in a mix of money market and short-term debt instruments, resulting in a portfolio with little more than a liquid fund maintaining a balance at the same time. There is maturity. Security and liquidity. However, no assurance can be given that the investment objective of the scheme will be achieved.
Axis Short Term Fund (An open-ended short term debt scheme invests in such instruments such that the Macaulay tenure of the portfolio is between 1 and 3 years. Relatively high interest rate risk and moderate credit risk.)
investment objective
Generating stable returns with a low risk strategy while maintaining liquidity through a portfolio comprising debt and money market instruments. However, no assurance can be given that the investment objective of the scheme will be achieved.
Axis Liquid Fund – (An open ended liquid scheme. Relatively low interest rate risk and moderate credit risk.)
investment objective
To provide high level of liquidity with reasonable returns commensurate with low risk through a portfolio of money market and debt securities. However, no assurance can be given that the investment objective of the scheme will be achieved.
Axis Overnight Fund (An open-ended debt scheme invests in overnight securities. Relatively low interest rate risk and relatively low credit risk.)
investment objective
The investment objective of the scheme is to provide reasonable returns commensurate with very low interest rate risk and high level of liquidity, primarily through investments made in overnight securities with maturity/residual maturity of 1 business day. However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved.
Macaulay period concept
Macaulay duration is a measure of a bond’s sensitivity to interest rate changes. It is a measure of the average life of the bond by taking into account the coupon payments as well as the repayment of the principal. The weighting of each cash flow is determined by dividing the present value of the cash flow by the value. Since it takes into account both coupon and maturity cash flows, it better reflects the relationship between interest rates and the bond’s price.
*Investors should consult their financial advisors if in doubt about whether the product is suitable for them or not.
Mutual fund investments are subject to market risks, read all the documents related to the scheme carefully.