AMFI (Association of Mutual Funds in India) data for September 2024 show that there are 12 floater funds in India with investments flowing in through 2.02 lakh folios. A total amount of Rs 1,940.07 crore has been channelised into floater mutual funds in September, while the net inflow was recorded at (-) Rs 1,216.02 crore. The net AUM (assets under management) of floater funds stood at Rs 52,141.38 in September.
With equities undergoing correction, more and more people are going to have a relook at debt funds and those which invest in precious metals such as gold and silver. Moreover, the possibility of Reserve Bank of India moving towards an interest rate cut is looks brighter and brighter with the RBI shifting its stance to neutral.
What are floater funds?
Floater funds fall in the universe of debt funds and these invest at least 65% of their money in floating-rate bonds. Floating rate bonds are debt instruments the interest rate (referred to as coupon rates) go up and down as the key interest rates in the economy vary. Unlike fixed-rate mutual funds, floater funds carry interest rates that are altered to limit the impact against rising interest rates.
Are floating rate funds a good investment?
Floater funds can appeal to those who are averse to risk of capital and would settle for debt funds. These funds allow the investors to minimise interest rate risk. Managers of floater funds manage interest rate risk by tuning their investment in floating rate debt paper the interest rates of which are adjusted with the prevailing market conditions. While fixed rate bonds lose value if interest rates rise, floating rate debt can capture relatively better returns when interest rates rise. Floater funds are liquid instruments which means investors can sell them on any normal business day.
Prominent floater funds in India
Some of the prominent floater funds in the Indian market are:
ICICI Prudential Floating Interest Rate fund: 8.51% returns over 2 years, 7.09% over 3 years, 7.40% over 5 years.
Kotak Floating Rate Fund: 8.18% returns over 2 years, 6.55% over 3 years, 7.20% over 5 years.
HDFC Floating Rate Debt Fund: 8.18% returns over 2 years, 6.87% over 3 years, 6.99% over 5 years.
Aditya Birla Sun Life Floating Rate Fund: 7.93% returns over 2 years, 6.76% over 3 years, 6.65% over 5 years.
Nippon India Floating Rate Fund: 8.08% returns over 2 years, 6.52% over 3 years, 7.15% over 5 years
(This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO or mutual funds.)
Floater funds are a part of the universe known as debt mutual funds and the prospect of these funds rise when interest rates go down. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
