Types of fixed income mutual funds in India offer diverse options for stable, low-risk investing. These funds focus on debt securities like bonds and treasury bills, prioritizing safety over high returns. What are the key types? Let’s break it down.
Liquid Funds: Ultra-Short-Term Safety
Among types of these mutual funds in India, liquid funds are the safest. They invest in securities maturing within 91 days, like commercial papers and treasury bills. Offering 6-7% returns, per the Economic Times, they beat savings accounts (3-4%). For example, HDFC Liquid Fund’s AUM was ₹70,000 crore in 2024, per AMFI. Ideal for parking cash or emergency funds, they also ensure quick withdrawals within a day.
Gilt Funds: Government-Backed Stability
Gilt funds, another type of fixed income mutual funds in India, invest in government securities with varying maturities. Backed by the RBI, they carry zero credit risk but face interest rate sensitivity. They yield 6-8%, per SEBI data, suiting medium-term goals like funding education. In 2024, a 2% rate hike dented gilt NAVs, per IBEF. In addition, they’re best for risk-averse investors with 3-5 year horizons.
Corporate Bond Funds: Higher Returns, Moderate Risk
Corporate bond funds, key types of fixed income mutual funds in India, target high-rated corporate bonds (AAA/AA). They offer 7-9% returns, per AMFI, balancing risk and reward. For instance, ICICI Prudential Corporate Bond Fund focuses on blue-chip issuers. They suit investors seeking better yields than gilts but face credit risk if issuers falter. Moreover, diversification across bonds lowers this risk, making them popular for medium-term plans.
Dynamic Bond Funds:
Dynamic bond funds round out types of fixed income mutual funds in India. They adjust durations based on rate cycles, aiming for 6-8% returns. In 2024, debt fund inflows hit ₹1.2 lakh crore, per IBEF, with dynamic funds gaining traction. Taxation applies—slab rates on gains, per SEBI. Learn more at the SEBI website.
Conclusion:
Fixed Income Mutual Funds in India offer a variety of options catering to different investment horizons and risk appetites. By understanding the characteristics of each type, investors can make informed decisions aligned with their financial goals. Ready to invest stably? Explore more fund insights now!
– Ketaki Dandekar (Team Arthology)
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