Debt mutual funds have been in the news lately for all the wrong reasons. Non-payment of dues and payment delays by companies have severely affected some mutual fund schemes. As a result, some categories, such as credit default funds, have seen significant outflows in the past year. In the same period, another category of debt mutual funds – corporate bond funds saw their assets rise by more than 75% from ₹67,000 crore at the end of July last year to ₹1,18,000 crore as of 31 July this year. What are Corporate Investing service? Read on for details.
What is a corporate bond fund?
A corporate bond fund is an open-end debt mutual fund that invests predominantly in the highest-rated corporate bonds. As mandated by Sebi, a corporate bond fund must invest at least 80% of its assets in the highest rated instruments.
These funds are less risky than credit default funds, as they invest in highly rated paper, but do not completely eliminate the element of risk. IL&FS, Zee, DHFL, RCom are great examples where top rated companies defaulted on their payments.
How have corporate bond funds performed?
Corporate bond funds have on average generated 9.60% returns in the past year. The best one-year performer in the category, L&T Triple Ace Bond Fund has great post generated a return of 11.32%, followed by Axis Corporate Debt Fund (11.22%) and Sundaram Corporate Bond (11.21%) by institutional investors.
How are corporate bond fund earnings taxed?
Short-term capital gains on corporate bond funds held for up to 36 months are added to the investor's income and taxed at the slab rate of income tax from corporate investors.
Long-term capital gains on corporate bond funds held for a period of more than 36 months are taxed at a rate of 20% after indexation.
About Us
CAMS GoCORP is a corporate investment portal designed to take investing by corporates to a new level. Discover simplicity, ease and safety in preparing and submitting Mutual Fund transactions, tracking investments and much more, with CAMS GoCORP. CAMS GoCORP is the only gateway you will need to transact across multiple Mutual Funds serviced by CAMS. No more multiple forms, faxes, transaction slips etc.
Website - https://gocorp.camsonline.com/corponline/