Bandhan Floating Rate Fund - Direct Plan
An Open-ended Debt Scheme predominantly investing in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives). A scheme with moderate interest rate risk and moderate credit risk.
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What is the Meaning of a Floating Rate Fund?
Think of a boat rising and falling with the tide — that's how the Bandhan Floating Rate Fund adjusts to market conditions. This fund invests in instruments with variable interest rates, which change based on benchmark rates, offering the potential for better returns in a fluctuating market. It's a smart choice for those looking to add flexibility and resilience to their fixed-income portfolio while being mindful of the risks involved.
A floating rate fund is a debt scheme that invests in financial instruments with variable interest rates. These funds are required to invest at least 65% of their assets in floating rate instruments, which adjust their yield based on changes in benchmark rates.
Floating rate funds are designed to be less sensitive to rising interest rates compared to fixed-rate funds. This makes them a low to moderately risky investment option. However, fluctuating market rates can still impact potential returns, and these funds remain vulnerable to risks such as credit and interest rate fluctuations.
Floating rate mutual funds are taxed like other debt funds. Short-Term Capital Gains (STCG) are applied to units held for less than three years, and taxed according to the investor's income tax slab. For units held over three years, Long-Term Capital Gains (LTCG) are taxed at 20% with indexation benefits.
Floating rate funds allow investors to diversify their fixed-income portfolio, providing exposure to variable-rate instruments with relatively lower risk.
- Min Investment 1,000
- Min SIP Amount 100
- Exit Load
Nil
Allocation to Satellite bucket with a minimum investment horizon of 6 months
Tier 1 Benchmark : NIFTY Short Duration Debt Index A-IIAlternate Benchmark : CRISIL 10 Year Gilt Index
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Performance as on 31st October 2024
| Scheme Names | CAGR Returns (%) | Current value of Investment of 10,000 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 1 year | 3 year | 5 year | 10 year | 18/02/2021 Since inception | 1 year | 3 year | 5 year | 10 year | 18/02/2021 Since inception | |
| Bandhan Floating Rate Fund - Regular Plan - Growth | 7.88 | 5.89 | N.A. | N.A. | 5.48 | 10,790 | 11,880 | N.A. | N.A. | 12,182 |
| 7.94 | 5.88 | 6.18 | 7.13 | 5.68 | 10,796 | 11,873 | 13,503 | 19,927 | 12,269 | |
| 10.67 | 5.60 | 5.44 | 6.91 | 5.06 | 11,070 | 11,777 | 13,037 | 19,512 | 12,003 | |
| ^ Tier 1 Benchmark | ^^ Alternate Benchmark | ^^^ Tier 2 Benchmark | ||||||||||
This fund is managed by Mr. Brijesh Shah (w.e.f 14/03/2024) & Mr. Debraj Lahiri (w.e.f 14/03/2024)
View fund performance of other funds managed by Mr. Brijesh Shah, Mr. Debraj Lahiri
Past performance may or may not be sustained in future.
Regular and Direct Plans have different expense structure. Direct Plan shall have a lower expense ratio excluding distribution expenses, commission expenses etc.
Taxation:
For taxation, please refer the link : https://bit.ly/46xQzi1
Bandhan Floating Rate Fund
(Scheme Risk-o-meter)
NIFTY Short Duration Debt Index A-II
(Tier 1 Benchmark Risk-o-meter)
This product is suitable for investors who are seeking* :
- To generate short-term optimal returns.
- To invest predominantly in floating rate instruments
Who Should Invest in Floating Rate Mutual Funds?
Floating rate mutual funds are considered low to moderate risk and are suitable for investors with a short investment horizon. These funds are ideal for those with a low-risk appetite, seeking relatively stable, short-term returns. However, they are still subject to risks, including credit and interest rate risks.
Floating rate funds may be suitable for investors with a conservative investment strategy seeking flexibility via an open-ended fund. Floater mutual debt funds are a suitable option for the diversification of fixed-income assets.
FAQs on Floating Rate Funds
What are floater funds?
The meaning of floater funds is that it is an open-ended scheme that invests at least 65% of their total assets in floating rate instruments. These may include debt or money market instruments.
What is the benefit of floating rate funds?
Floating rate funds are less sensitive to changes in interest rates and are a liquid investment option. Floating rate funds may be suitable for investors seeking to liquidate their investments. Floating mutual funds may also help investors diversify their portfolios.
How do floating rates work?
Floating rates in India are determined every quarter. The rate of interest is subject to revision by the RBI on the basis of various factors.
What is meant by a floating interest rate?
A floating interest rate changes according to market conditions. Contrarily, fixed interest rates remain the same for the entire tenure of the investment or loan. Investors may potentially benefit by investing in floating rate funds when interest rates are moving up.
What are the disadvantages of floating rate mutual funds?
Floating rate funds may be unpredictable. The floating rate may increase the monthly payments and make budgeting cash flow difficult.
Are floater funds risky?
Floating rate debt funds are categorised as a low to moderate risk investment option. However, as they invest in debt instruments, these funds may be subject to some risk including interest rate risk or credit risk.
What are floater funds linked to?
The corpus of floating rate mutual funds is invested in floating rate instruments. Floater funds are linked to benchmark indices from the market. A change in the benchmark may potentially cause a change in the yield from floating rate funds.