What are capital-free mutual funds?


In this section, we’ll take a closer look at some popular types of non-stock mutual funds and what each one invests in:

Debt fund

Debt funds are the types of mutual funds that primarily invest in fixed income investment instruments such as government bonds, debt securities, treasury bills and various other mutual funds such as fixed term plans, liquid funds, gilt funds, etc. The primary objective of debt funds is to generate regular returns, as many of these mutual funds offer fixed interest rates as well as predetermined maturity dates. These debt funds are excellent options for investors with a low appetite for risk.

Money market funds

Similar to the number of investors who trade stocks, some investors also trade in the money market, also known as the spot market. Money market mutual funds invest in various money market instruments such as short-term debt securities, cash, treasury bills, commercial paper, certificates of deposit, etc. The main purpose of money market funds is to earn regular interest and maintain the market. fund value at very stable levels.

Liquid Mutual Funds

Liquid mutual funds also technically fall under the category of debt mutual funds because they invest primarily in debt securities. However, the duration of liquid mutual funds is only 91 days. The maximum amount that can be invested in liquid funds is ₹10 lakh. These types of mutual funds are ideal for people who want to invest in highly liquid securities where they can withdraw their money in the short term.

Fixed Maturity Funds

As the name suggests, fixed-maturity funds are a type of mutual fund that offer fixed maturity periods, ranging from one month to 5 years. Depending on your preferences and needs, you can choose to invest in a fixed-maturity fund with a duration of your choice. Fixed-maturity funds typically invest in debt, bonds, and money market, so their risk is relatively much lower than that of equity mutual funds. Interest income is the primary objective of fixed-term funds.

pension funds

Pension funds are generally long-term mutual funds that allow you to invest money for your retirement. While saving for retirement is necessary, investing those funds for wealth growth is equally important. This is where you can choose to invest part of your retirement savings in pension funds. Although some pension funds invest in stocks and shares, there are other types of low-risk pension funds that avoid investing in stocks. You may choose to invest in non-equity pension funds if you are looking for low-risk, long-term investment options.

Disclaimer: This article is not intended to convey financial advice and BQ Prime does not endorse any of the funds/programs mentioned above. Please invest at your own discretion.


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