Understanding Debt Mutual Fund

                                                

                                             Understanding Debt Mutual Fund

Debt funds are funds that invest strictly in debt related securities. Unlike any other asset class like equity or Gold , debt securities are characterized by the mainly following  three factors

•           Maturity period of Debt Securities
•           Known coupon rate (known as interest rate)
•           Known maturity value  (Future Value)

Examples of Debt  instruments include, Commercial paper (CP’s),certificate of Deposits (CD’s) T Bills, Debentures, Debentures issued by Corporate, State Governments and Central Government, approved private deposits, Fixed deposits etc.

Why Debt Funds are better than Direct Debt Securities

·         It is less risky to invest into a debt fund than to invest directly into a debt security,

·         The investor of a bond or debt security gets the interest or the coupons directly, whereas an investor in a debt fund receives a Tax Free Dividend (After Deduction Of Dividend Distribution Tax) at the discretion of the fund house

·          

·         There can be times when you may not be able to sell a debt security in the debt market, or you may be able to sell only at a huge loss as there may not be anyone willing to buy.With debt funds, the fund house will always redeem ( Subject to Exit Load if any )your fund units at the declared NAV (. Except some Close Ended Funds and ,FMP’s, Consult Your Advisor Before Investing)

·         Debt funds are managed by professional fund managers whose job is to track and invest in the debt market. As an individual bond investor, one may not have the time and resources to track and invest appropriately

·         Bonds or debt securities have a maturity date but the debt funds do not have a maturity date. (Except Fixed Maturities Plan or Close Ended Debt Fund)

·         Investor  Enjoy Better Post Tax Return. Tax Benefit like Tax Free Dividends & Indexation benefit which is not available with Traditional Fixed Deposit

For Further assistance Feel Free To Contact Us 

Vcare Investment Services PVt ltd

201 Sai Sadan, 76/78 Modi Street, 

Fort, Mumbai 400001

022- 66548814/15

www.vcareinvests.com

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