How target maturity funds help manage risk in debt investment


One method of managing volatility risk is following hold-till-maturity (HTM). This concept can be practised by investing directly in bonds. On maturity of the bond, money flows back to the investor and returns are not dependent on market conditions at that point in time. In mutual funds, fixed maturity plans (FMPs) work on this principle. If it is a three-year FMP, on maturity, all the bonds in the portfolio mature and there is no market/volatility risk.
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