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CREDIT RISK FUNDS – What? Factors? A Bit More!

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Credit Risk funds

Every investor invests in varioustypes of funds, according to their risk profile. Some have a high appetite for risk, while other prefer a moderate risk. One such fund for such an investor is credit risk fund. Credit Risk funds are a category of debt funds that invest 65% of their portfolio in AA rated paper. They aim to generate high returns by taking high credit and investing in lower–rated papers. These low papers typically generate two to three percent more returns as compared to risk–free papers.    

Here: 

Credit Risk Mutual Funds are debt funds particularly invest in low-credit quality debt securities. Also, these funds have high-risk as they end up getting invested in low-quality instruments.  

Features of Credit Risk Funds 

Following: 

  • These funds are tax-efficient since LTCG are taxed at 20%, while, their tax-slab rates are 30%. 
  • The fund manager plays a vital role in the fund performance.  
  • Credit risk funds have more liquidity risks.  

Credit Risk Funds – The Working 

Like said, best credit card funds invest in money market instruments and debt securities that have a low-credit rating as these instruments offer high-interest rates. Also, the fund benefits when the rating of the security is upgraded. Credit risk funds have low-interest rate risks & the fund manager ensures that he/she keeps the default probability low & credit quality of the fund is within control. Generally, credit risk funds offer 2-3% high returns as compared to risk-free debt instruments.  

Factors to Consider 

Here: 

  • Make sure you look for best credit risk funds with a large corpus. This will allow the fund manager to reduce the risks and diversify various instruments. 
  • Prefer to check the expense ratio of the fund. 
  • Always choose a credit risk funds which is diversified across different securities. 
  • Look for an experienced fund manager. 
  • Check your investment plan before investing in credit risk funds. 

Top 5 Credit Risk Funds by Gulaq 

Here: 

  • ICICI Prudential Credit Risk FundIt is a debt mutual fund scheme that was launched by ICICI Prudential mutual fund. Later on, this scheme was introduced on 2nd Jan 2013 to its investors. Currently, the fund is managed by Akhil Kakkar, and Manish Banthia. Talking about AUM, it is of INR 12,381 Cr, and the latest NAV is of INR 23.09 (dated as of 20th Feb 2020). The fund growth is rated as moderate risk. Also, the minimum SIP investment is INR100.  
  • Kotak Credit Risk FundIt is a debt mutual fund scheme that was launched by Kotak Mahindra mutual fund. Later on, it was introduced on 1st Jan 2013 to its investors. Currently, the fund is managed by Deepak Agrawal. Talking about AUM, it is of INR 5104 Cr, and the latest NAV is of INR 17.78 (dated as of 20th Feb 2020). The fund growth is rated as moderate low-risk. 
  • HDFC Credit Risk Debt FundIt is a debt mutual fund scheme that was launched by HDFC mutual fund. Later on, it was introduced on 25th March 2014 to its investors. Currently, the fund is managed by Shobhit Mehrotra. Talking about AUM, it is of INR 14,487.09, and, the latest NAV is of INR 17.377 (dated as of 20th Feb 2020). Also, the minimum SIP investment is INR 500. 
  • SBI Credit Risk FundIt is a debt mutual fund scheme that was launched by SBI mutual fund. Later on, it was introduced on 2nd Jan 2013 to its investors. Currently, the fund is managed by Mansi Sajeja, and Lokesh Mallya. Talking about AUM, it is of INR 5055 Cr, and, the latest NAV is of INR 33.05 (dated as of 20th Feb 2020). The fund growth is rated as moderate risk. Also, the minimum SIP investment is INR 500, and, lumpsum investment is INR 5000.  
  • AXIS Credit Risk FundIt is a debt mutual fund scheme that was launched by Axis mutual fund. Later on, it was introduced on 15th July 2014 to its investors. Currently, the fund is managed by Devang Shah. Talking about AUM, it is of INR 1205 Cr, and, the latest NAV is of INR 16.14 (dated as of 20th Feb 2020). The fund growth is rated as moderate risk. Also, the minimum SIP investment is INR 1000, and, lumpsum investment is INR 5000.  

Furthermore, you can read more about Credit Risk Funds, here: https://www.gulaq.com/credit-risk-fund-a-moderate-risk-investment-fund/ 

 

Looking to invest? Hop on to gulaq.com and start investing in direct mutual funds. Furthermore, you can also get in touch: [email protected]  or Whatsapp +91-9818894632

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*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

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