2-5 year target maturity debt funds are yielding up to 7.7%

As per the website, Edelweiss’s target maturity debt funds are yielding up to 7.7% which is pretty cool considering the fact these debt funds are efficient taxation wise when compared to bonds.

The effective tax rate for these debt funds is at 20% with taxation benefit if held for more than 3 years. The same benefit isn’t available in normal bonds as they are taxed without any indexation benefit.

Check this illustration to know how the benefit of indexation works

Source → https://www.bharatbond.in/assets/images/downloads/pdf/Product_FAQs.pdf


BB are a good tool. Moved some of my FDs to BB and pledged it for margin. :rocket:

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BB is a great product. A good substitute for FD.
Couple of my thoughts for people who are not used to investing in debt ETF:

  1. These yields are calculated using NAV and not traded price. And sometime traded is couple of points different from NAV. So make sure you are buying at right price to get these yields. Or use BB FOF (cost is marginally higher)

  2. Some of these ETF maturing early, no longer have 3 years left, so buying now will not give taxation benefit of indexation.


Considering that rate hike cycle might extend due to inflation… what’s the best strategy to maximize returns in BB?


I daily lowball a few paise on the order book. Somedays I get none, somedays I get some.

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BB should not be used to play interest cycle. BB is great to lock in rates for long duration.