All you need to know about Bajaj Finserv Money Market Fund

all you need to know
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The Bajaj Finserv Money Market Fund is an open-ended debt scheme offered by Bajaj Finserv Mutual Fund. It invests in money market instruments with a maturity of up to 1 year. The fund aims to generate regular income by investing in high-quality money market instruments.

Managed by Bajaj Finserv Asset Management Ltd., this fund can be a suitable option if you are looking for an investment avenue to park your money for the short term. Here is an in-depth look at the Bajaj Finserv Money Market Fund to help you understand if it fits your investment needs.

  • Table of contents
  1. What is Bajaj Finserv Money Market Fund?
  2. Bajaj Finserv Money Market Fund Features
  3. Who should invest?
  4. Taxation

What is Bajaj Finserv Money Market Fund?

The Bajaj Finserv Money Market Fund is an open-ended debt mutual fund scheme that invests in money market instruments. As per the mandate, the fund invests in money market securities with a maturity profile of up to 1 year.

Some of the instruments the fund can invest in include:

  • Certificate of Deposits
  • Commercial Paper
  • Treasury Bills
  • Government securities with a residual maturity of up to 1 year
  • Repo of corporate debt securities

The fund aims to generate regular income by dynamically managing a portfolio of high-quality short-term money market instruments of up to 1 year maturity. The portfolio management seeks to balance high liquidity and potentially optimal returns.

Bajaj Finserv Money Market Fund Features

Bajaj Finserv Money Market Fund seeks to generate regular income through investments in money market instruments.

Fund Features

  • Type of Scheme: An open-ended debt scheme investing in money market instruments with Relatively Low Interest Rate Risk and Moderate Credit Risk
  • Plans Offered: Regular and Direct
  • Risk Level: Moderate/Low to moderate

Who should invest?

The Bajaj Finserv Money Market Fund can be a suitable investment option for investors with a conservative risk profile and a short-term investment horizon.

  • Surplus Cash: Specifically, this fund can be suitable for those who have surplus cash lying idle in savings accounts or term deposits. The fund can offer a marginally better return potential compared to traditional fixed-income options like bank FDs, while providing high liquidity. The short duration of the underlying instruments also ensures relatively lower volatility. However, the scheme is subject to market risks unlike traditional fixed income options that offer fixed returns.
  • High Liquidity Needs: The fund is appropriate for retail investors who want to park money that they need access to in the short term. For instance, one may invest money set aside for emergencies, short-term expenses, or interim needs. The high liquidity of the fund allows easy access to money when required, without paying any exit penalties.
  • Investment Horizon: Investors who have an investment horizon of less than 1 year can consider investing in this fund. Since the maturity profile of instruments ranges up to 1 year, it suits those with a short-term outlook. The relative stability of returns and moderate risk positioning also resonates with those who have a temporary parking need.
  • Specific Goals: Those nearing important financial goals in the next 6-12 months can also invest. For instance, if you are saving for a foreign vacation or school fees due next year, parking the money in this fund can allow you to earn better returns than a savings account.

Taxation

The taxation of the Bajaj Finserv Money Market Fund is similar to that of other debt mutual fund schemes:

  • Units purchased after April 1, 2023 – Gains from Money Market Fund investments made after April 1, 2023, no longer receive indexation benefit and are considered to be short-term capital gains irrespective of the holding period. Therefore, they are added to the investor’s taxable income and taxed at the applicable slab rate.
  • Units purchased before April 1, 2023 – Gains from investments made before April 1, 2023, and held for a period of 36 months or more – are considered long-term capital gains and taxed at 20% with indexation benefit.
  • Additionally, dividends from the fund are taxable as per the investor’s tax bracket.

Conclusion

The Bajaj Finserv Money Market Fund can be a suitable investment option for investors looking to park surplus funds for short periods. It aims to balance high liquidity and relative stability of returns through a low-duration portfolio. The fund can be considered for parking funds for emergencies or short-term goals. However, investors should be aware of the associated risks and consult their financial advisors before investing.

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This document should not be treated as an endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purposes only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals, and horizon. This information is subject to change without any prior notice.