Top Low-Duration Debt Fund

  • What are low duration funds?
    Low Duration Fund engage in money market instruments and debt securities with a Macaulay Duration of six to twelve months. This is the definition given by the Securities and Exchange Board of India (SEBI). Low duration funds are not restricted in terms of the type or credit grade of debt assets they may hold. As a result, these funds invest in a diverse variety of securities, including as money market securities, government securities, corporate bonds, securitized debt, hybrid instruments such as REITs, allowed derivatives, and other mutual fund units. Low Duration Funds have a greater maturity than liquid and overnight funds, but a lower maturity than short, medium, and long duration funds.
  • Below are some of the top low duration fund

Best Debt MF (Low Duration)

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  • What returns you can expect?
    Because these funds have a short tenure, you may anticipate to earn an average return of 7 per cent to 8 per cent. These funds enable investors to lodge their money for 6-12 months and receive higher returns than a traditional savings account.
  • What are the underlying risks?
    These funds have a moderate amount of interest rate risk since they own securities with maturities not more than 12 months to 18 months. When compared to longer duration funds, the value of low duration funds is less volatile. Despite the fact that the majority of these funds hold pretty decent quality debt, they are not limited in their ability to assume credit risk.
  • What investment horizon is suited for low duration funds?
    Because the typical maturity of low duration funds is roughly one year, this product is better suited to clients with a 6 to 12-month investment horizon.
  • Who should invest in them?
    Low duration funds are appropriate for investors with a six-month or longer investment horizon. Investors with extremely short investment horizons might consider low-risk liquid or ultra-short duration funds. Low duration funds, on the other hand, offer larger returns in exchange for a little increase in risk for holding duration longer than six months. Investors can use them to temporarily park surpluses from property sales, yearly bonuses, and so on, or to accumulate cash for a short-term financial goal.

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