• Nifty %
  • Sensex %
  • Nifty Bank %
  • Equity
  • Mutual Fund
  • Currency
  • Commodity
  • Derivative
  • Research

MARKET SNAPSHOT

  • INDIAN
  • GLOBAL
  • CURRENCY
  • COMMODITIES
  • TOP GAINERS
  • TOP LOSERS

MARKET SNAPSHOT

  • INDIAN
  • GLOBAL
  • BSE SENSEX
    1. 1443442
    2. -965.56
    3. 1443 %
  • BSE SENSEX
    1. 1443442
    2. -1000.56
    3. 30000 %
  • BSE SENSEX
    1. 1443442
    2. -1000.56
    3. 30000 %
  • BSE SENSEX
    1. 1443442
    2. -1000.56
    3. 30000 %
  • BSE SENSEX
    1. 1443442
    2. -1000.56
    3. 30000 %
  • Last Update:09 Nov,2017
  • Show All
  • CURRENCY
  • COMMODITIES
  • YEN TO IND
    1. 1443442
    2. -965.56
    3. 1443 %
  • BSE SENSEX
    1. 1443442
    2. -1000.56
    3. 30000 %
  • BSE SENSEX
    1. 1443442
    2. -1000.56
    3. 30000 %
  • BSE SENSEX
    1. 1443442
    2. -1000.56
    3. 30000 %
  • BSE SENSEX
    1. 1443442
    2. -1000.56
    3. 30000 %
  • Last Update:09 Nov,2017
  • Show All
  • TOP GAINERS
  • TOP LOSERS
  • 52 WEEK HIGH
  • 52 WEEK LOW
Karvy
Financial
Academy

I want to learn


  • Equity
  • Mutual Funds
  • Commodities

Fixed Income Mutual Funds – What are they and their Advantages?

Fixed income is a type of investment not dealing with equity. The issuer/borrower is obliged to make periodic payments on a predetermined timetable in case of investments categorized as fixed income.

Another significance that can be extracted from the word "fixed income" is that it refers to the incoming cash flow of a person that does not alter with each period. This may include income from investment tools such as preferred stocks, bonds or even pensions that provide a fixed income.

The term 'fixed income' also carries a connotation that the retired people have limited discretionary income when retirees and pensioners are dependent on their post-retirement benefits as their only source of income.

Fixed income funds are mutual funds as they are a good way to diversify their portfolio of investments. But to understand what fixed-income funds are, a lot of clarity is needed.

What are Fixed Income Funds?

Fixed Income Funds are a type of mutual fund investing in securities of fixed income such as municipal bonds, corporate bonds, treasury bills, etc. Many kinds of styles and shapes fixed income funds come in. Fixed income funds are also called income funds and debt funds in India.

Funds classified as fixed income typically invest in debt securities issued by firms, banks, government or financial institutions. The different kinds of debt-securities in which investment in a fixed-income mutual fund is recognized are treasury bills and deposit documents. Based on its maturity period, the instrument is categorized. For example, debt securities, if their maturity period is more than one year, are known as debentures and bonds; subsequently, if the maturity period is less than one year than commercial papers or treasury bills.

At the agreed time, the borrower/issuer of these debt securities is obliged to pay the principal together with interest.

How does Fixed Income Funds work?

Fixed income funds have a face value that is used to calculate the interest rate. Usually, an investor wishing to invest in a fixed income fund is concerned primarily with the face value, interest rate, maturity value, and time period. On average, unlike other mutual funds that see a lot of attrition, fixed-income funds are held until maturity.

Advantages of Fixed Income Funds

While the holding of funds may increase in value, the fundamental purpose of this scheme is to provide investors with current income on a steady basis. Fixed income funds provide investors with many advantages. Few of these are discussed below:

  • Regular Income

    As the name suggests, while preserving capital, the fixed income fund promises a regular monthly income from your investment. Revenue from these funds is in the form of interest and dividends. Thus, investment in fixed income provides great capital gains potential

  • Liquidity

    Those who want to invest cash with the flexibility to withdraw it in case of emergencies find fixed-income funds appealing.

  • Choice of investments

    Reputed financial firms provide low to moderate and high-risk alternatives for fixed-income schemes. Investors can, therefore, choose a scheme based on their risk-bearing capacity in relation to investment in fixed income funds.

  • Diversification

    Fixed income fund scheme offers benefits through investment diversification. Such funds can readily be diversified by industry, credit quality, and maturity; as they have access to bigger pools of capital.

  • Professional Management of Investment Portfolio

    Investors can take advantage of professionalism. When investing in such schemes, professional fund managers manage your portfolio of fixed income investment with in-depth analysis, research, and greater diversification to deliver the best advantages for your investment.

Conclusion

Every investment is linked to certain risks and there is no exception to the fixed income fund. While such funds aim to provide investors with steady cash flow and regular income, it is advisable to delegate your investment responsibility to the reputable and responsible financial institution or business.


Know more about Share Market


X

Provided credentials already exist.

OPEN DEMAT ACCOUNTPARTNER WITH US
+