Returns on debt funds decoded
Many investors get attracted to a fund offering a higher yield. It should be noted that yield is not the all-encompassing statistic for debt funds.
Many investors are unfamiliar as to how debt funds generate returns. Corporates need to raise debt to finance various requirements such as working capital and capital expenditure. These needs can be met by borrowing from a bank through loan or raising resources from debt capital market. Debt securities such as commercial papers (CPs), non-convertible debentures (NCDs) and bonds are issued by corporates to raise resources from debt capital market.
Login to enjoy exclusive benefits!
- Unlocked premium articles
- Personalized news
- Market Watchlist
- Insightful Newsletters & more