A mutual fund is a collection of stock and bonds managed by an investment company for mutual benefits of all investors. In such funds, each investor who contributes money in the scheme, entrust responsibility of his investment in the hands of a professional investment manager of a financial institution or a company. The key benefit of such investment is that as each member contributes to the cost of investment, it consequently makes less burden of cost upon each member.
A fixed income mutual fund promises a fixed rate of return and less of a risk than other mutual fund schemes. In such funds, money is primarily invested in government and corporate debt. While fund holding may increase in value but the basic purpose of such scheme is to provide current income on a steady basis to investors. Fixed Income funds offer many benefits to investors. Few of them have been discussed below: Regular Income
As the name suggests, fixed income fund promises a regular monthly income from your investment while preserving capital. Income from such funds is in form of interest and dividends. Thus, fixed income investment provides great potential for capital gains.
Liquidity
Fixed income funds are found attractive by those who want to invest money with flexibility of withdrawing it in case of emergencies.
Choices of investments
Reputed financial companies provide options of fixed income schemes with low to moderate and to high risk level. Hence, investor can choose scheme as per his risk taking capability in relation to fixed income investments.
Diversification
Fixed income fund scheme offers benefits availed by diversification of an investment. Such funds can be easily diversified as per sector, credit quality, and maturity; as these funds have access to larger capital pools.
Professional management of investment portfolio
Investors can avail benefits of professionalism. When you invest in such schemes, professional fund managers manage your fixed income investment portfolio with in-depth analysis, research and greater diversification to bring best benefits on behalf of your investment. Every investment is associated with certain risks and fixed income fund is not any exception. While objective of such funds is to provide a steady cash flow and regular income to investors, though, it advisable to delegate your investment responsibility into the hands of reputed and responsible financial institution or company.
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