Target Maturity Funds
5paisa Research Team
Last Updated: 02 Jan, 2025 12:55 PM IST
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Content
- Best Target Maturity Funds You Can Invest in 2023
- What are Target Maturity funds?
- How do target maturity funds work?
- Why Should You Invest in Best Target Maturity Funds?
- Advantages of target maturity funds
- How to invest in Target Maturity Funds using 5paisa App?
- Are Target Maturity Funds a Good Investment?
- Things we consider to provide ratings for a mutual fund
Target maturity funds are the type of debt mutual fund. With this type of fund, investors can easily navigate interest rate risks. They are passive debt funds that consist of a maturity date. A TMF's portfolio comprises bonds, part of underlying bond indexes. These bonds have a similar maturity to the fund's stated maturity.
Truth be told, TMFs are open-ended debt funds having a specific maturity date. They are similar to FMPs or fixed maturity plans. These open-ended schemes invest in the bonds of underlying indexes that they track. Their portfolio comprises the following:
● Public sector undertakings or PSUs
● State development loans or SDL
● G-secs and other significant bonds
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Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.
Frequently Asked Questions
Investors looking for predictable returns between the middle and the long term can consider target maturity funds. Since they are low-risk investment choices, they can protect an investor's capital. So, investors not eager to take high investment risks can consider this option.
Yes, the return from TMFs is apparently predictable. Note that these funds hold bonds with the same maturity. In addition to that, returns are also predictable only if investments are held up to the time of maturity.
The tax on any target maturity funds is of the debt funds. Schemes with a maturity that are longer than three years can get long-term capital gains tax. The rate is around 20% with indexation. Note that gains over & above inflation remain taxable here.
So, now you know the target maturity funds meaning, definition, benefits, FAQs, and where to invest. This post now compiles everything about TMFs in general.