Which debt fund defied the trend in 2021?
Dec 27, 03:12

In the recent past, investors have shied away from fixed-income avenues because of low interest rates. But they still favoured one debt mutual-funds category–floating-rate bond funds. These funds are typically popular when interest rates are low and are expected to rise. They invest in pure floating-rate instruments and synthetic floaters, which are fixed-income instruments converted into floaters through overnight indexed swaps. But,investors must remember that a rise in interest rates doesn't automatically lead to gains from floating-rate funds. A floating rate fund benefits only if the benchmark interest rates rise. That doesn't always happen.

Floater funds