TYPES OF MUTUAL FUNDS PART II

Hi! It’s me again “Mutual Fund”. In last article I had introduced my family members from equity category. Now I will introduce you to my family members from debt category. So get ready.



SEBI (Securities and Exchange Board of India) has categorised us in to 5 main categories viz. equity schemes, debt schemes, hybrid schemes, solution oriented schemes and other schemes. So in this article my family members falling under debt schemes category would introduce themselves and in the coming articles family members in other categories will introduce themselves.

DEBT SCHEMES

My 16 family members fall in this category. So now they will introduce themselves.

Overnight Fund :

Hi! I am overnight fund and I have the assets that are invested in overnight securities having maturity of 1 day.

Liquid Fund :

Hey! Myself liquid fund and I have the assets that are invested in debt and money market securities with maturity of upto 91 days.

Ultra-Short Duration Fund :

Hello! I am ultra-short duration fund and I have the assets that are invested in debt and money market instruments such that the Macaulay duration of the portfolio is between 3 months to 6 months.

Low Duration Fund :

Hi! I am low duration fund and I have the assets that are invested in debt and money market instruments such that the Macaulay duration of the portfolio is between 6 months to 12 months.

Money market Fund :

Hey guys! I am money market fund and I have the assets that are invested in money market instruments having maturity upto 1 year.

Short Duration Fund :

Hello everyone! I am short duration fund and I have the assets that are invested in debt and money market instruments such that the Macaulay duration of the portfolio is between 1 year to 3 years.

Medium Duration Fund :

Hi! I am medium duration fund and I have the assets that are invested in debt and money market instruments such that the Macaulay duration of the portfolio is between 3 years to 4 years.

Medium to Long Duration Fund:

Hi all! medium to long duration fund here. I have the assets that are invested in debt and money market instruments such that the Macaulay duration of the portfolio is between 4 years to 7 years.

This is the fifth article of the knowledge series sponsored by Sundaram Asset Management Company, which will cover various topics important for your financial well-being. 

Long Duration Fund :
I am long duration fund and I have the assets that are invested in debt and money market instruments such that the Macaulay duration of the portfolio is greater than 7 years.

Dynamic Bond Fund :
Hey everyone! I am dynamic bond fund and one of my trait is that I am not restricted by investment duration. I am free to invest the assets across duration.

Corporate Bond Fund :
Hi all! I am corporate bond fund and I invest minimum 80 per cent of the total assets only in highest rated corporate bonds.





Credit Risk Fund :
Hi all! I am credit risk fund and I invest minimum 65 per cent of the total assets in below highest rated corporate bonds.

Banking and PSU Fund :
Hello! I am banking and PSU fund and I invest minimum 80 per cent of the total assets in debt instruments of banks, public sector undertakings and public financial institutions.

Gilt Fund :
Hey! I am gilt fund and I invest minimum 80 per cent of the total assets in G-Secs (Government Securities) across maturity.

Gilt Fund with 10 year constant duration :
Hey guys! I am gilt fund with 10 year constant duration, brother of gilt fund and I invest minimum 80 per cent of the total assets in G-Secs (Government Securities) such that the Macaulay duration of the portfolio is equal to 10 years.

Floater Fund :
Hi! I am floater fund and I invest minimum 65 per cent of the total assets in floating rate instruments.

Now all of you must be wondering what does Macaulay duration as mentioned by some of my family members from debt category actually means. Macaulay Duration is a concept developed by Frederick Macaulay in 1938. It measures the bond’s sensitivity to interest rate changes. Technically, it is the weighted average number of years the investor must hold a bond until the present value of the bond’s cash flows equals the amount paid for the bond.

All my family members have introduced themselves. Hope now you would be clear of what are the traits of my family members that fall under debt schemes. I am sure this will help you in making right investment decision and to understand which family members suits you more. Remember before choosing in which of my family members to invest, it would be wise to assess your risk profile. This is because investment in my family members do carry some amount of risk.