Diversification, Portfolio, Safe and Stable Debt Product, Debt Fund, NSE, Nifty PSU Bonds Plus SDL September 2027 60:40 Index, PSU Bond Funds, ICICI Prudential Mutual Fund, Fund Index, mf Risk, Investments, Funds.  financial planning smart financial planning tips investment portfolio debt repayment plan credit score contingency fund retirement planning ULIP unit linked investment plan mutual fund MF mutual fund investing debt mutual fund 2020, asset allocation, assets Allocation strategy, portfolio rebalancing, asset mix, mutual funds, asset classes, equity, debt, cash equivalents, gold, SIP, biggest money lessons of 2020, money lessons for 2020, financial emergency, health insurance, patience, diversification, investing ,Since these mutual funds are low-risk, it turns out to be one of the best options for investors with a low risk appetite.

Mutual funds are becoming increasingly popular. However, sometimes it is difficult to decide which mutual fund to choose. Debt mutual funds are one such fund.

Debt funds, in fact, are low-risk mutual funds that invest most of the money from investors in fixed income instruments such as state and central government bonds, bonds issued by banks, corporate bonds, certificates of deposit, etc. Because they are low-risk mutual funds, it turns out It is one of the best options for investors with low risk appetite.

“Because debt mutual funds are different from mutual funds, investors need to consider some basic and basic steps before choosing a debt mutual fund,” says Ajinkya Kulkarni, co-founder of Wint Wealth.

1) credit rating

A credit rating is an indication that debt securities investors used to ensure that the issuer would be able to pay interest on time and repay the principal.

The credit rating predicts the chances of default, not the chances of getting money back. It might be like going to a restaurant. You know anything above 3 stars will be fine,” says Kulkarni.

Similarly, there are various ratings in bonds where AAA indicates the highest repayment capacity up to D, which indicates a default by the issuer.

Therefore, Kulkarni suggests choosing funds that invest at least 80 percent of the portfolio in higher-rated bonds if you don’t want to take on credit risk.

2) Average Maturity

Average Maturity is the weighted average of all current maturity periods of debt securities held in the fund.

Since it’s always better to go for low volatility and store money for 2-3 years, especially in a debt mutual fund, look at charts with medium maturities that match your investment horizon.

Note that the higher the average maturity (adjusted term), the more sensitive the fund’s returns are to changes in interest rates.

3) pregnancy exit

Exit burden is the fee an investor needs to pay when exiting or withdrawing from a mutual fund. It is calculated as a percentage of the amount invested.

Suppose a debt mutual fund you invested with a return of 4 per cent per annum has an exit burden of 0.3 per cent 60 days ago, and you invest Rs 5,000, which grows to Rs 5,017 in 30 days, and you want to withdraw he-she. You will pay Rs 15.05 as exit loading fee.

Kulkarni points out, “This erases all the gains. So, make a note of the exit burden while choosing a joint debt fund. Do not invest the money required after 4-5 months in a fund that has an exit burden of withdrawals one year earlier.”

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