How is debt fund are having different category if we can sold them in open market?

Personal finance
1

Hello,
I am noob in debt fund so please explain me some details of debt fund,

If we can sell debt funds like ultra short-term or liquid funds whenever we want then why look at maturity time?

2

You cannot sell debt funds in open market, they are not traded like shares. You buy debt fund units from fund houses like HDFC, ICICI etc. and you sell the units of your funds to the same fund houses.

Debt funds buy bonds with different maturity periods, so if you want to invest in debt funds for only 1 year and if you buy a debt fund which has bonds maturing in 2 years, if interest rates rise, these bonds will give losses, so your debt fund will give loss.

So depending upon the time we want to invest in debt funds, we should choose the fund category.

1 Like
3

google for macaulay duration and you will understand why maturity is so important