Debt mutual funds: Target maturity funds vs fixed maturity plans
Of late, many investors have shifted a sizable part of their investment towards debt mutual funds because the returns and tax-efficient gains are better compared to bank fixed deposits. Due to the default in certain debt schemes from popular fund houses there was apprehension among investors for some time. In spite of that, one category of debt mutual funds that is gaining popularity is target maturity funds (TMFs). Let us discuss the same in detail.
What is TMFs?
Target maturity funds are a type of debt funds that have a specific maturity date, aligned with the expiry date of the bonds that it has in its portfolio. Generally, such funds carry lower interest rate risk and provide more predictive and stable returns. As such, these funds have
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