How To Choose The Right Debt Fund: 3 Key Factors Investors Must Check Before Investing

Choosing the right debt fund requires more than simply looking at past returns. Shweta Rajani, Mutual Fund Head, Anand Rathi Wealth, says investors should focus on three key factors before investing. First, match the fund’s duration with your investment horizon to manage interest rate risk. Investors should also check the fund’s net yield or yield to maturity (YTM), which indicates the income potential of its underlying securities. Finally, examine the credit quality and portfolio breakup to understand the level of credit risk. These details are usually available in a fund’s fact sheet. Comparing duration, net yield and credit quality can help investors make a more informed debt fund selection.