With the awareness of mutual funds rising and falling interest rates on guaranteed savings products, many risk-averse investors who were used to conventional products like bank fixed deposits, PPFs, and NSCs, have moved towards debt funds for good reasons. Such investors find debt funds to be less volatile compared to the more popular equity funds and more tax-efficient than their fixed deposits, PPFs, and NSCs with the potential of offering better returns. However, investors are still prone to default risk i.e risk of losing principal and interest payments, and interest rate risk i.e price fluctuations due to changes in interest rates.
Target maturity funds (TMFs) help investors navigate the risks associated with debt funds better by aligning their portfolios with the maturity date of the
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