Why Target Maturity Funds Make Sense

15 Dec 2022

Back to all Infographics

Target maturity funds (TMFs) are passively managed debt funds launched with a specified maturity date to replicate an underlying index. They buy bonds of similar maturity and hold these to maturity with all interest received during the holding period being reinvested in the fund.

  • As per SEBI regulations, TMFs can invest only in high credit quality papers like G-Secs, SDLs and PSU bonds thus mitigating any credit risk
  • Unlike FMPs, TMFs are open ended thereby facilitating liquidity for the investors in case of contingencies
  • If the TMF investment exceeds three years from the date of investment, the investor stands to benefit from long term capital gains taxation ( 20% with indexation benefit )
  • As interest received on the bonds is reinvested in the fund, investors accrue interest regularly and make the most of compounding.
  • As TMFs lock yields and continue to roll down the maturity, these make good investment options in times when the interest rates have seen a surge
Read more

Popular Infographics

Tag Clouds

Related Infographics

  • Disclaimer

    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

Leave a Comment

Thanks for submitting your details.

What is SWP in Mutual Fund?

FIVE Key Things to Look For While Selecting a Debt Fund

Add this website to home screen

Are you Bank of Baroda Customer?

This is to inform you that by clicking on continue, you will be leaving our website and entering the website/Microsite operated by Insurance tie up partner. This link is provided on our Bank’s website for customer convenience and Bank of Baroda does not own or control of this website, and is not responsible for its contents. The Website/Microsite is fully owned & Maintained by Insurance tie up partner.

The use of any of the Insurance’s tie up partners website is subject to the terms of use and other terms and guidelines, if any, contained within tie up partners website.

Proceed to the website

Thank you for visiting www.bankofbaroda.in

We use cookies (and similar tools) to enhance your experience on our website. To learn more on our cookie policy, Privacy Policy and Terms & Conditions please click here. By continuing to browse this website, you consent to our use of cookies and agree to the Privacy Policy and Terms & Conditions.