Term Of The Week
Types of debt mutual funds: Low Duration Funds
Oct 25, 2018Low duration funds invest in debt and money market instruments of a certain duration profile, such that the portfolio’s Macaulay Duration is between 6 to 12 months. The term structure of interest rates, popularly known as the yield curve, is usually upward sloping. This means that longer duration debt or money market... Read More
Yield to Maturity
Oct 25, 2018Along with bond duration, Yield to Maturity is one of the most important concepts of fixed income investments. Yield to Maturity is the expected annualized return from your bond investment, if you hold the bond till its maturity. The equation for calculating yield to maturity (YTM) is as follows... Read More
Types of Debt mutual funds: Ultra-short duration funds
Oct 25, 2018Ultra-short duration funds are money market mutual funds, which invest in money market instruments (commercial papers, certificates of deposits, treasury bills etc) of a certain maturity / duration profile, such that the Macaulay Duration of the fund portfolio is between 3 to 6 months. Longer dated papers gives... Read More
Bond duration: Macaulay and Modified Duration
Oct 25, 2018Duration is one of the most important concepts of fixed income investments. Bond prices have an inverse relationship with interest rate changes; bond prices go up when interest rate falls and vice versa. Duration is a measure of the sensitivity of a bond’s price to interest rate changes. There are two analytical... Read More
Types of Debt Mutual Funds: Liquid Funds
Oct 4, 2018Liquid mutual funds are money market mutual funds, where the residual maturities of portfolio securities do not exceed 91 days. Liquid funds invest in securities like commercial papers, certificates of deposits, treasury bills etc. Like overnight funds, liquid funds have virtually no interest rate risk and are highly liquid... Read More
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