Debt: Corporate Bond

What is it?

The corporate bond debt funds invest in the highest-rated corporate bonds. They don't follow a tenure-based specification. But they have to invest a minimum of 80% of total assets in corporate bonds.

Objective

These funds aim to provide income and capital appreciation by investing primarily in corporate bonds with an AA+ or above rating.

Suitability and opinion

These funds are suitable for investors with low to moderate risk appetite looking to diversify their portfolio in debt securities of financially strong corporates. They are also a good option for investors aiming to generate stable periodic income from their investments. These funds aim to generate slightly better returns compared to bank FDs of similar tenure. The risk is very low in this category. But these funds generally beat inflation by a slight margin and can not be used as a tool for long-term wealth creation.