Credit Risk Mutual Funds belong to Open-ended Debt category which invests in low-credit rating / quality Corporate Securities which offers higher Interest rates. It is the risk of default of the issuer of the security in repaying the principal and/or interest.
Instruments with a credit rating below AA are considered to carry a higher credit risk.
They are tax-efficient for investors in the highest tax slab since Long Term Capital Gains (LTCG) are taxed at 20% while their tax slab rates are 30%. These funds have more liquidity risks.
Category Returns: 6% to 10%
Recommended Duration: at-least for 3 Years.
Below are best selected Credit Risk Funds which offers regular IDCW (Income Distribution cum Capital Withdrawal) while some gives Quarterly, Monthly or Weekly basis:
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