Decoding Short Duration Funds

For a variety of reasons, many investors do not contemplate investing in debt funds. However, including them in your portfolio may frequently assist you limit the downside risk. Furthermore, in the near term, debt funds might also assist you in protecting your wealth. There is nothing better than short duration funds for short-term requirements. This category of debt funds has been thoroughly explored in this article

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Corporates are the most common kinds of investors in fixed income mutual funds. Despite the fact that the situation is changing, fewer investors are interested in investing in debt mutual funds. There might be several reasons for this, as these are rarely as well-marketed as equity and hybrid funds. Furthermore, due to the smaller commissions provided on debt mutual funds, even mutual fund distributors are hesitant to market them. However, this is not true for every mutual fund distributor. There are a few that practise selling based on what is best for their clients, but the vast majority of them are motivated by commissions.

However, investing in debt mutual funds is crucial since it adds steadiness to your total financial portfolio. In contrast to equities, where we must recognise market cycles, we must identify interest rate cycles in debt funds. This is not the end of it. In order to be on the right end of the curve, you must analyse the yield curve. Furthermore, keeping a watch on the Reserve Bank of India’s (RBI) policies is critical since they impact bond yields. Selecting debt mutual funds amid rising or declining inflationary conditions is critical, since the wrong choice might have a negative impact on your total returns.