Kotak Floating Rate Fund - Regular Plan

Investment Strategy

The scheme seeks to generate income through investment primarily in floating rate debt instruments, fixed rate debt instruments swapped for floating rate returns and money market instruments.

Suitability

"This is a fund that invests mainly in bonds whose rate of interest keeps changing with the prevailing interest rates in the economy. Given their investment mandate, such funds are usually less volatile in response to changing interest rates.

They can be a viable option for the fixed-income allocation in your portfolio. However, we believe that retail investors can avoid these funds altogether. There are far too many kinds of debt funds with a highly nuanced classification based on the type or duration of bonds they can invest in. We believe that so many fund categories add to complexity which is easily avoidable. Retail investors can simply invest in Liquid funds for an investment horizon of up to one year and Short Duration funds for the fixed income allocation (which should be 100 per cent for an investment horizon of up to three years) in their longer-term portfolios.

If you do decide to invest in them, remember that they are meant to deliver steady, but low to moderate returns and are not suitable to build wealth in the long run."