What Are Corporate Bond Mutual Funds?
Corporate bonds are debt instruments issued to raise capital by corporates. Also known as Non-Convertible Debentures (NCDs), corporate bonds fund the growth and expansion of corporates. Both public and private companies raise them as an alternative to bank loans. View More
Types Of Corporate Bond Funds
Corporate bond funds are typically categorized into two types:
● Type one: Funds that only prefer investing in debt papers of top-tier companies such as banks and other PSU companies.
● Type two: Funds that prefer investing in a bit low-rated companies, typically AA- or less.
Who Should Invest In Corporate Bond Mutual Funds?
Top corporate bond funds are ideal for investors who want regular, fixed revenue at higher levels from avenues with less risk.
You can usually predict the returns from these types of funds. However, assured returns aren’t guaranteed by such funds. View More
Features of Corporate Bond Mutual Funds
Below are some of the features of corporate bond funds.
Corpus Allocation
A Corporate Bond Fund allocates 80% of its corpus for high-rated corporate bonds. The remaining 20 % is invested in other debts and money market instruments, including REITs. View More
Taxability of Corporate Bond Funds
The corporate bond funds returns are taxed at the time of receipt of dividends or redemption of the scheme. Dividend income is taxed at the regular slab rate applicable to the investor. View More
Risk Involved With Corporate Bond Funds
Though the high-rated papers keep corporate bonds comparatively safe on default risk, they are exposed to interest rate and market risks similar to other debt funds.
Below is a brief account of the risks corporate bonds are subject to. View More
Advantage of Corporate Bond Funds
High on Safety
As 80% of the exposure of corporate bond funds is in top rated debt securities, mostly AAA and AA rated. Hence they carry inherently lower credit risk. View More
How Do Corporate Bonds Make Returns?
Corporate bond funds usually function similarly to any other mutual fund in the stock market.
A boost or surge in the corporate bond value in the mutual fund portfolio results in a growth in the NAV of the fund, hence releasing profits.
Meanwhile, a decline in the value of NAV has a contrasting impact on the mutual fund’s aggregate value.
How To Invest In A Corporate Bond Mutual Fund Using The 5paisa App?
Investing in corporate bond funds via the 5paisa app is simple and convenient. Here are the steps on how to proceed:
● Register yourself on the 5paisa app. If you’re already a user, simply log in. View More