BAJAJ FINSERV ASSET MANAGEMENT LIMITED.
Diversify your portfolio to reduce risk and get relatively stable growth potential. Invest in Bajaj Finserv AMC’s debt mutual funds.
Our schemes follow diverse investment strategies like megatrend investing, moat investing and more
AdvantageAll investments are driven by our in-house investment philosophy, InQuBe, a combination of the Information Edge, Quantitative Edge and Behavioural Edge.
Through our unique investment approach, we aim for market-beating returns in the long term.
SIP and lumpsum options in many schemes start with as little as Rs. 500
Debt funds are mutual funds that invest primarily in fixed-income securities such as government bonds, corporate bonds, treasury bills and commercial papers. They typically offer modest returns and entail low/low-to-moderate risk. They can be suitable for conservative investors, those with short-term goals, and those looking to diversify their portfolio across debt and equity to balance risk and return potential.
A debt or fixed-income security represents a loan given by one party to another. In the case of debt mutual funds, the loan is given by an investor to a government or a corporation. The borrower agrees to repay the principal amount at maturity and make interest payments at specified intervals. The return potential of debt securities comes from these interest payments. Bonds, debentures, and treasury bills are common types of debt securities.
Debt mutual funds invest in a diverse portfolio of such securities. They may invest in short-term, medium-term, long-term fixed-income instruments or a combination of these, depending on the scheme category and investment objective.
Here are some types of investors who may consider investing in debt mutual funds:
To invest in a Bajaj Finserv AMC debt mutual fund, follow these steps:
There are several debt mutual fund categories in India, each investing in securities with different maturity lengths. These include:
Before choosing a debt fund investment, investors should consider the credit quality of the underlying bonds within the fund’s portfolio. Higher-rated bonds typically offer lower yields but come with lower credit risk, while lower-rated bonds may provide higher yields but carry increased credit risk.
Additionally, investors should evaluate the fund’s average maturity and duration, as these factors influence sensitivity to interest rate fluctuations. The rate of a fixed income security is inversely proportional to the prevailing interest rates in the economy. So as interest rates rise, bond prices fall, and vice versa. A higher duration typically indicates higher return potential but also greater sensitivity to interest rates, implying higher risk.
Any gains made on debt fund investments are considered short-term capital gains, irrespective of the holding period. They are added to your annual income and taxed at the applicable income tax slab rate.
Debt mutual funds are a popular avenue for those seeking relatively stable investments with reasonable return potential. Here are some key advantages:
Here are a few things to keep in mind when making debt fund investments:
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A debt fund is a type of mutual fund that primarily invests in fixed-income securities such as government or corporate bonds. These funds generate returns through interest income and are typically less volatile than equities.
There are no risk-free debt funds. Despite their relative stability, debt funds do not guarantee returns or capital safety. Returns can fluctuate based on market conditions and capital protection is also not guaranteed.
Some key risks faced by debt funds include credit or default risk, interest rate risk and liquidity risk. Interest rate risk is the possibility that fluctuations in the prevailing interest rates in the economy will affect the value of debt securities. Generally, a rise in interest rates lead to a fall in bond prices (which reduces the scheme’s net asset value or NAV), and vice versa. Credit risk is the risk of default by the issuer, while liquidity risk pertains to the fund’s ability to sell securities quickly to meet redemption requests.
No scheme is inherently better than the other. The type of mutual fund that is suitable for you will depend on your investment goals, risk appetite and investment horizon, apart from other factors. Generally, debt funds may be suitable for investors with a low or moderate risk appetite and a short or medium-term investment horizon.
No, unlike fixed deposits, debt mutual funds do not offer fixed or guaranteed returns. However, they typically offer higher liquidity and flexibility with regard to redemption and additional investments.
Open-ended debt funds do not have a lock-in period, but some may have exit loads for withdrawals before a specified period. However, close-ended funds such as fixed maturity plan funds can only be redeemed at maturity.
The debt fund category that is suitable for you will depend on your investment horizon, risk tolerance, and investment goals. Debt funds that invest in short-term securities may be more suited to short-term goals or investors who want reduced interest rate risk. Medium- or long-duration funds can offer higher return potential over a slightly longer horizon, but with greater interest rate risk. Assess factors such as the credit quality and duration of the underlying assets when choosing a debt fund investment option. You can also diversify across different types of debt securities to balance risk and return potential.
Investing in Bajaj Finserv Liquid Fund can help you obtain relatively better returns as compared to a traditional savings account. Also, since liquid funds invest predominantly in highly rated money market instruments, they are a relatively stable investment option. Lastly, you can redeem your units of Bajaj Finserv Liquid Fund at any time with T+1 settlement timeline and plan your liabilities.
Individuals, corporates including SMEs, partnership firms, NRIs, charitable trusts, etc., can invest in Bajaj Finserv Liquid Fund.
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Our Investment Philosophy reflects what we, as an organisation, believe will generate a good return on equity investment for our investors in the long term. It dictates our goals and guides decision making.
Alpha (a) is a term used in investing to describe an investment strategy’s ability to beat the market.
Alpha is thus also often referred to as excess return or the abnormal rate of return in relation to a benchmark, when adjusted for risk. Essentially, it means doing better than the crowd without taking disproportionate risk.
Collecting superior information
Analysts and portfolio managers strive to collect superior information about the business and the management of the company. They try to generate superior earnings forecast and the balance strength of the company and the industry, thereby trying to 'beat the market' on information edge. This is an important source of alpha for an investor. However, over the years, retaining the information edge has become more difficult and expensive. With a whole lot of investors trying to collect superior information, how can an investor be sure to continuously have accurate and material information about the companies, ahead of others, all the time?
Processing information better
Even if you don't have material information earlier than the crowd, you can still generate better outcomes if you are able to process this information better. Investors develop models and algorithms with enhanced predictive powers to forecast the next move. Fund managers who invest based on some pure formal analytical models are quantitative managers. Here, the goal is to try and beat other investors based on the sophistication of procedures or analytics. The analytical edge can be quite useful until it gets copied by many, and then it may stop generating superior returns.
Exploiting behavioural biases
As the name suggests, this edge is achieved by superior behaviour in reacting to the inputs available to maximise alpha. Modern finance assumes people behave with extreme rationality. However, researchers in behavioural finance have shown that this is not true. Moreover, these deviations from rationality are often systematic. Behavioural managers try to exploit situations where securities are mispriced by the market because of behavioural factors. At Bajaj Finserv AMC, we endeavour to combine the best of these edges.
