{"id":3343,"date":"2023-12-30T15:49:01","date_gmt":"2023-12-30T15:49:01","guid":{"rendered":"https:\/\/blog.kashly.in\/?p=3343"},"modified":"2023-12-30T15:49:03","modified_gmt":"2023-12-30T15:49:03","slug":"what-type-of-mutual-funds-are-safe","status":"publish","type":"post","link":"https:\/\/kashly.in\/read\/what-type-of-mutual-funds-are-safe\/","title":{"rendered":"What type of mutual funds are safe?"},"content":{"rendered":"\n

Mutual fund<\/a> investments offer a wide array of choices to achieve various financial goals. So any of your investment decisions can shape your financial future. However, an important question arises: what type of mutual funds are safe?<\/p>\n\n\n\n

So let us see some of the low-risk mutual fund options. <\/p>\n\n\n\n

Liquid mutual funds and overnight funds<\/h3>\n\n\n\n

A liquid mutual fund is a type of mutual fund that invests in short-term, highly liquid assets. For example, treasury bills, certificates of deposit, and commercial paper. If you are seeking safety and quick access to your money, you can go for liquid mutual funds. <\/p>\n\n\n\n

The Net Asset Value (NAV) of the liquid fund is calculated throughout all 365 days. But for other debt funds, the NAV is determined on working days.<\/p>\n\n\n\n

Moreover, these funds offer no lock-in period. So you can enter or exit at your convenience. Furthermore, these funds provide more returns compared to a savings bank account. <\/p>\n\n\n\n

The overnight funds have a maturity of one night. Because of the short investment horizon and shorter maturity period, the risk exposure of these funds is very low. <\/p>\n\n\n\n

\"what-type-of-mutual-funds-are-safe\"<\/figure>\n\n\n\n

Ultra short-duration mutual funds <\/h3>\n\n\n\n

Ultra short-duration mutual funds are a type of debt fund. They invest in debt and money market instruments. <\/p>\n\n\n\n

These funds have maturities ranging from 3 to 6 months. So that the fund’s performance is less sensitive to fluctuations in interest rates. <\/p>\n\n\n\n

Importantly, USMFs are designed to minimize interest rate risk<\/a>. So these funds focus on high-quality debt and money market instruments. These include treasury bills, certificates of deposit, and commercial paper. By maintaining a portfolio of low-risk assets, USMFs protect your investment.<\/p>\n\n\n\n

Low-duration funds <\/h3>\n\n\n\n

Low-duration funds focus on investing in short-term debt securities. These funds are different from other types, such as overnight and liquid funds.<\/p>\n\n\n\n

One crucial aspect of low-duration funds is the portfolio duration. In the case of low-duration funds, this duration falls in the range of 6 to 12 months.<\/p>\n\n\n\n

These funds may involve some level of credit risk<\/a>. But they are a good choice for investors seeking safety and high returns.<\/p>\n\n\n\n

\"what-type-of-mutual-funds-are-safe\"<\/figure>\n\n\n\n

Gilt funds<\/h3>\n\n\n\n

Gilt funds have a unique investment approach. They allocate a significant portion of their assets,  a minimum of 80%, to government securities.<\/p>\n\n\n\n

If you want safety and wish to minimize risk, gilt funds can be a wise choice. These funds have low credit risk because they invest in government-backed securities.<\/p>\n\n\n\n

However, these funds can be sensitive to changes in interest rates. When interest rates fluctuate, the prices of government securities may also change, which can impact the fund’s net asset value (NAV). So be mindful of this too.<\/p>\n\n\n\n

Conclusion <\/h5>\n\n\n\n

Indeed, each mutual fund investment carries a level of risk, with some being more conservative and others more adventurous. So do thorough research before selecting a fund for your investment. <\/p>\n","protected":false},"excerpt":{"rendered":"Mutual fund investments offer a wide array of choices to achieve various…\n","protected":false},"author":7,"featured_media":3360,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[108,112,117,9,113,118],"class_list":{"0":"post-3343","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-mutual-funds","8":"tag-gilt-funds","9":"tag-liquid-funds","10":"tag-low-duration-funds","11":"tag-mutual-funds","12":"tag-overnight-funds","13":"tag-ultra-short-duration-funds"},"yoast_head":"\nWhat type of mutual funds are safe? - Kashly<\/title>\n<meta name=\"description\" content=\"Investment in mutual funds can shape your financial future. 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