5 Best Types Of Low Risk Mutual Funds in 2023

 

Let’s have a better understanding of the characteristic of low-risk mutual fund investment

Overnight Funds – These really are open-ended debt funds that make investments in short-term securities with a one-day maturity. You might think about using an instant fund as an alternative for keeping funds in a savings account if you need to store money for a very short period of time, like a day to a week or so.

Open-ended debt funds or “liquid funds” invest in debt and money market securities having maturities of just 91 days or less. The majority of their investments are made in liquid assets including T-Bills, Repos on G-secs, call money, and other money markets products like Certificates of Deposits (CDs) and Commercial Papers (CPs).

Ultra-Short Duration Funds – Such open-ended debt funds invest in comparatively increased debt documents and money market instruments, placing them beside the liquid funds in the risk-return potential. According to regulatory requirements, the Macaulay Duration (MD) of the portfolios for Ultra-Short Duration Funds must be between 3 and 6 months. This is determined by investing in debt and money market securities.

Banking and PSU Funds –It is a requirement for these open-ended funds to invest at least 80% of their resources in debt securities issued by PSUs, banks, and public financial institutions. With just some commitment to longer-term maturity papers, these funds typically invest in debt instruments with short- to medium-term maturities. These funds are appropriate if you have a 2-3 year investment horizon and are willing to take on a little bit extra risk because of the interest risk involved.

Corporate Bond Funds-According to regulatory requirements, open-ended debt funds must devote at least 80% of their assets to buying only the greatest corporate bonds. There is no clear definition of the type of period the fund will hold. However, the majority of Corporate Bond Funds have an average maturity profile that runs from 1 to 3 years.

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Disclaimer

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing. Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors.

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Disclaimer

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing. Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors.

Read More