Floater Funds offers different types of returns based on market performances and benchmark indices. These funds comprise debt securities, and they consist of the liability of issuing entities and they invest in corporate bonds, treasury bills, Certificate Deposits, and other debt tools. These funds return completely depending on the market rates if the interest rate rises the floater fund returns also increase and in counter any downfall in the interest rates then it will affect the returns like there will be the risk of lower returns.
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What are the Features of Floater Funds?
Portfolio:
The debt floater mutual funds investment portfolio invests in both private and government companies about 65% of the corpus.
Risks:
When we talk about risks these funds have limited risks, though it is linked to the market performances as they invest their corpus in debt securities that mitigate the risks substantially.
Tenure:
Short term plan is for 1 year and these types of funds are invested in government securities, for example, treasury bills, certificates of deposits. Long-term tenure plans are for more than 1 year and these are invested in corporate bonds, government bonds, etc.
Taxation:
Two types of tax are applicable if the holding period is less than 3 years then it is the short-term capital gain tax and if the holding period is more than 3 years then the long-term capital gain tax is applicable.
What are the advantages of Floater Debt Funds?
They offer higher returns.
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