Purpose of Credit Risk Mutual Fund
1. To Attract High Returns: Credit Risk Mutual Funds are a source of stable and constant return-giving funds for their portfolio, they give better returns as compared to other equity-based funds. Credit Risk Mutual Funds have proved to give higher returns in medium and longer time duration.
2. To Diversify Portfolio: Credit Risk Mutual Fund invests in the ratio of 65:35 between debt-based securities and another asset category. This helps investors to diversify their portfolios among different classes of assets.
3. To Invest in a Fund with Debt Allocation: An investor who wants to minimise the volatility of equity-based funds looks to invest in the Credit Risk Mutual Fund, as it invests predominantly in debt-based securities.
4. To Gain Regular Income: Regular-income seeker investors always keep some portion of their portfolio in equity. Combining equity with high-return earning fixed-income instruments helps navigate income needs as well as helps beat inflation. Investors look for Credit Risk Mutual Funds as an option for regular income.