Target maturity funds are open-ended, passive debt schemes having a fixed maturity date. These funds invest in high quality debt securities that mature around the pre-decided time-frame.
1. Return Trajectory
The target maturity funds usually have a defined return course depending on the index yield
2. Low Credit Risk
As target maturity funds primarily invest in government-issued debt securities, they carry relatively lower credit or default risk. Consequently, these funds carry low credit risks as compared to other debt schemes
3. Indexation Benefit
As target maturity funds are debt schemes, they offer indexation benefits to investors who stay invested for more than 3 years. They also have the potential to offer higher post-tax returns, than traditional deposits
4. Higher Liquidity
Target maturity funds do not have lock-in period. Thus, investments can be withdrawn anytime before maturity (subject to exit load of the scheme)
5. Quality-driven Portfolio
Generally, Target maturity funds track an index of high quality papers like SDLs (State Development Loans) & PSU bonds etc. which are sovereign rated therefore helping you strengthen your portfolio
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