Page 88 - BFSI CHRONICLE 3092022.indd

BFSI Chronicle, 11 Edition September2022
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be relatively stable. For e.g, call money market. Corporate Bond Fund:
Corporate Bond Fund mainly invests in corporate
Liquid Fund: bonds having credit rating AA+ and above. This is
Here the funds are invested in debt and money a good option for investors having a moderate risk
market instruments having residual maturity up to appetite and expecting better return than bank or
91 days only. These instruments are fairly liquid and post office investment.
have the potential to offer reasonable returns than
traditional options. Credit Risk Fund:
This fund predominantly invests in papers rated AA
Ultra-Short Duration Fund and below (excluding AA+ rated corporate bonds).
Ultra-Short Duration Fund invests in debt securities Credit Risk Fund aims to earn higher returns by
and money market instruments so has to have investing in papers which offer relatively higher
Macaulay Duration of the portfolio is between 3-6 interest rates. However, they carry higher credit risk
months. (Macaulay Duration is the length of time compared to other debt funds.
taken by the investor to recover his invested money in
the bond through coupons and principal repayment. Banking & PSU Fund:
This length of time is the weighted average of the Banking & PSU Fund invests at least 80% of its
period the investor should remain invested in the assets in debt and money market securities of Banks,
security in order to have the present value of the PSU (Public Sector Undertakings), Public Financial
cash flows from the investment match the amount Institutions. As per the SEBI amendment of December
paid for the bond.) 2017 debt securities issued by Municipal Bodies
can also be included in this fund. This fund carried
Low Duration Fund: relatively low risk.
Low Duration fund invests in debt securities and
money market instruments such that the Macaulay Dynamic Bond Fund:
Duration of the portfolio is between 6-12 months. Dynamic Bond Funds invest in debt instruments
having varying maturity based on the current
Money Market Fund: interest rates regime. The fund manager changes
Money Market Fund invests in money market the portfolio dynamically depending on the interest
securities with a maximum maturity of 1 year. These rates. These funds are a good option for investors
securities are Commercial paper (CP), Certificates having moderate risk tolerance and time horizon of
of Deposits (CD), Treasury bills , Intercorporate 3 to 5 years.
Deposits (ICD) This fund is suitable for parking
short term surpluses .Investment in this fund gives Gilt Funds:
reasonably high liquidity and generates better return Gilt funds invest at least 80% of its assets in
than traditional one. government securities with varying maturities. These
funds do not carry credit risk however interest risk
Short Duration Fund: is high. These funds are best suited for investor with
This Fund invests in debt securities and money less risk tolerance.
market instruments where Macauley Duration of the
portfolio is between 1-3 years. Floater Fund:
65% of the investible corpus is invested in floating
Medium Duration Fund: rate instruments and carry lower interest rate risk.
In this fund investment is done in debt securities and
money market instruments where Macauley Duration Risk Associated with Debt Funds:
of the portfolio is between 3-4 years. Debt fund fundamentally carries three types of risks:

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