Credit Risk

About

A Credit Risk Fund is a category of debt mutual fund that aims to generate higher returns by investing in lower-rated corporate bonds (below highest credit ratings), thereby taking higher credit risk.

As per classification by the Securities and Exchange Board of India (SEBI), Credit Risk Funds must invest at least 65% of total assets in below AA-rated corporate bonds.

Fund Type

Debt

Key Features

Higher Yield Potential Due to Credit Spread

Sensitive to Corporate Financial Health

Potential for Higher Returns than High-Rated Debt Funds

Taxation

STCG

Holding Period ≤ 36 months, As per Income Tax slap

LTCG

Holding Period > 36 months, As per Income Tax slap

Dividends Tax

Dividends are added to your income, Taxed as per your slab rate. TDS applicable as per rules

Exemption Limit

Basic exemption limit adjustment allowed if total income is below threshold

Indexation

No Indexation

Allocation

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AA and below rated corporate bonds

65%

Higher-rated, GS and Money Market securities

35%

Locked in Period

Nill

Exit Load

An exit load of 0 – 1% is generally applicable if units are redeemed within 1 Years. However, the exact structure may vary based on the specific scheme

Risk Associated

Find the funds

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully before investing. Past performance is not indicative of future performance.