“Mutual funds are subject to market risks. Read all scheme-related documents carefully.”
Depending on their investment horizon, risk tolerance, and financial objectives, investors can select from a variety of mutual fund schemes.
Liquid funds & debt funds typically two separate categories.
Debt funds, which cover overnight funds, liquid funds, duration funds, gilt funds, credit opportunities funds, etc.
Liquid funds with maturity up to 91 days only.
Depending on the investment goal of scheme, debt funds with different durations and maturities.
Liquid Funds, credit risk and interest rate risk are low due to lower portfolio maturity
Debt Funds interest rate risk & credit risk vary depending upon the investment portfolio
Liquid fund returns are less volatile - portfolio's maturity is shorter.
Debt funds may fluctuate less to more depending on portfolio maturity, changes in interest rates & credit profile
Liquid funds tend to provide better liquidity since they invest in short maturity
Debt funds is a function of residual maturity, credit profile and interest rate cycle
Since liquid funds fall within the category of debt funds, the taxation on investments in liquid funds and other debt funds is same.
Long Term Capital Gains – held for 36 Month or more - Short Term Capital Gains – held for less than 36 Month
Depending on their financial objectives, risk tolerance, and investment horizon, investors can choose from a wide range of debt funds.